Document:

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                                                                    EXHIBIT 4.01

                              ELECTRONIC ARTS INC.
                              --------------------

                    2000 EMPLOYEE CLASS A STOCK PURCHASE PLAN

             As Adopted by the Board of Directors on May 25, 2000
               As Approved by the Stockholders on July 27, 2000

         1.  Establishment of Plan. Electronic Arts Inc., (the "Company")
             ---------------------                              -------
proposes to grant options for purchase of the Company's Class A Common Stock to
eligible employees of the Company and its Subsidiaries (as hereinafter defined)
pursuant to this 2000 Employee Stock Purchase Plan (the "Plan"). For purposes of
                                                         ----
this Plan, "parent corporation" and "Subsidiary" (collectively, "Subsidiaries")
shall have the same meanings as "parent corporation" and "subsidiary
corporation" in Sections 424(e) and 424(f), respectively, of the Internal
Revenue Code of 1986, as amended (the "Code"). The Company intends that the Plan
shall qualify as an "employee stock purchase plan" under Section 423 of the Code
(including any amendments or replacements of such section), and the Plan shall
be so construed. Any term not expressly defined in the Plan but defined for
purposes of Section 423 of the Code shall have the same definition herein. A
total of 500,000 shares of Class A Common Stock are reserved for issuance under
the Plan. Such number shall be subject to adjustments effected in accordance
with Section 14 of the Plan.

         2.  Purposes.  The purpose of the Plan is to provide employees of the
             --------
Company and its Subsidiaries designated by the Board of Directors as eligible to
participate in the Plan with a convenient means to acquire an equity interest in
the Company through payroll deductions, to enhance such employees' sense of
participation in the affairs of the Company and its Subsidiaries, and to provide
an incentive for continued employment.

         3.  Administration. This Plan may be administered by the Board or a
             --------------
committee appointed by the Board (the "Committee"). The Plan shall be
                                       ---------
administered by the Board or a committee appointed by the Board consisting of
not less than three (3) persons (who are members of the Board), each of whom is
a disinterested director. As used in this Plan, references to the "Committee"
shall mean either the committee appointed by the Board to administer this Plan
or the Board if no committee has been established. Subject to the provisions of
the Plan and the limitations of Section 423 of the Code or any successor
provision in the Code, all questions of interpretation or application of the
Plan shall be determined by the Committee and its decisions shall be final and
binding upon all participants. Members of the Committee shall receive no
compensation for their services in connection with the administration of the
Plan, other than standard fees as established from time to time by the Board of
Directors of the Company for services rendered by Board members serving on Board
committees. All expenses incurred in connection with the administration of the
Plan shall be paid by the Company.

         4.  Eligibility.  Any employee of the Company or the its Subsidiaries
             -----------
is eligible to participate in an Offering Period (as hereinafter defined) under
the Plan except the following:

                  (a)  employees who are not employed by the Company or its
Subsidiaries on the fifteenth (15th) day of the month before the beginning of
such Offering Period;

                  (b)  employees who are customarily employed for less than 20
hours per week;

                  (c)  employees who are customarily employed for less than five
(5) months in a calendar year;

                  (d)  employees who, together with any other person whose stock
would be attributed to such employee pursuant to Section 424(d) of the Code, own
stock or hold options to purchase stock or who, as a result of being granted an
option under the Plan with respect to such Offering Period, would own stock or
hold options to purchase stock possessing five (5) percent or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Subsidiaries; and

                  (e)  employees who would, by virtue of their participation in
such Offering Period, be participating simultaneously in more than one Offering
Period under the Plan.

         5.  Offering Dates. The Offering Periods of the Plan (the "Offering
             --------------
Period") shall be of twelve (12) months duration commencing on the first
business day of March and September of each year and ending on the last business
day of February and August, respectively, hereafter. The first Offering Period
shall commence on September 1, 2000. The first
<PAGE>

day of each Offering Period is referred to as the "Offering Date". Each Offering
Period shall consist of two (2) six-month purchase periods (individually, a
"Purchase Period"), during which payroll deductions of the participant are
accumulated under this Plan. Each such six-month Purchase Period shall commence
on the first business day of March and September of an Offering Period and shall
end on the last business day of the following August and February, respectively.
The last business day of each Purchase Period is hereinafter referred to as the
Purchase Date. The Board of Directors of the Company shall have the power to
change the duration of Offering Periods or Purchase Periods without stockholder
approval if such change is announced at least fifteen (15) days prior to the
scheduled beginning of the first Offering Period or Purchase Period, as the case
may be, to be affected.

         6.  Participation in the Plan. Eligible employees may become
             -------------------------
participants in an Offering Period under the Plan on the first Offering Date
after satisfying the eligibility requirements by delivering to the Company's or
Subsidiary's (whichever employs such employee) payroll department (the "payroll
department") not later than the 15th day of the month before such Offering Date
unless a later time for filing the subscription agreement is set by the Board
for all eligible Employees with respect to a given Offering Period a
subscription agreement authorizing payroll deductions. An eligible employee who
does not deliver a subscription agreement to the payroll department by such date
after becoming eligible to participate in such Offering Period under the Plan
shall not participate in that Offering Period or any subsequent Offering Period
unless such employee enrolls in the Plan by filing the subscription agreement
with the payroll department not later than the 15th day of the month preceding a
subsequent Offering Date. Once an employee becomes a participant in an Offering
Period, such employee will automatically participate in the Offering Period
commencing immediately following the last day of the prior Offering Period
unless the employee withdraws from the Plan or terminates further participation
in the Offering Period as set forth in Section 11 below. Such participant is not
required to file any additional subscription agreements in order to continue
participation in the Plan. Any participant whose option expires and who has not
withdrawn from the Plan pursuant to Section 11 below will automatically be re-
enrolled in the Plan and granted a new option on the Offering Date of the next
Offering Period. A participant in the Plan may participate in only one Offering
Period at any time.

         7.  Grant of Option on Enrollment. Enrollment by an eligible employee
             -----------------------------
in the Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
each Purchase Date up to that number of shares of Class A Common Stock of the
Company determined by dividing the amount accumulated in such employee's payroll
deduction account during such Purchase Period by the lower of (i) eighty-five
percent (85%) of the fair market value of a share of the Company's Class A
Common Stock on the Offering Date (the "Entry Price") or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Class A
Common Stock on the Purchase Date, provided, however, that the number of shares
of the Company's Class A Common Stock subject to any option granted pursuant to
this Plan shall not exceed the lesser of (a) the maximum number of shares set by
the Board pursuant to Section 10(c) below with respect to all Purchase Periods
within the applicable Offering Period or Purchase Period, or (b) 200% of the
number of shares determined by using 85% of the fair market value of a share of
the Company's Class A Common Stock on the Offering Date as the denominator. Fair
market value of a share of the Company's Class A Common Stock shall be
determined as provided in Section 8 hereof.

         8.  Purchase Price.  The purchase price per share at which a share of
             --------------
Class A Common Stock will be sold in any Offering Period shall be eighty-five
percent (85%) of the lesser of:

                  (a)  the fair market value on the Offering Date, or

                  (b)  the fair market value on the Purchase Date.

         For purposes of the Plan,  the term "fair market value" on a given date
shall mean the closing  bid from the  previous  day's  trading of a share of the
Company's Class A Common Stock as reported on the NASDAQ National Market System.

         9.  Payment of Purchase Price; Changes in Payroll Deductions; Issuance
             ------------------------------------------------------------------
             of Shares.
             ----------

                  (a)  The purchase price of the shares is accumulated by
regular payroll deductions made during each Purchase Period. The deductions are
made as a percentage of the employee's compensation in one percent (1%)
increments not less than two percent (2%) nor greater than ten percent (10%).
Compensation shall mean all W-2 compensation, including, but not limited to base
salary, wages, commissions, overtime, shift premiums and bonuses, plus draws
against commissions; provided, however, that for purposes of determining a
participant's compensation, any election by such participant to reduce his or
her regular cash remuneration under Sections 125 or 401(k) of the Code shall be
treated as if the participant did not make such election. Payroll deductions
shall commence with the first pay period
<PAGE>

following the Offering Date and shall continue to the end of the Offering Period
unless sooner altered or terminated as provided in the Plan.

                  (b)  A participant may lower (but not increase) the rate of
payroll deductions during a Purchase Period by filing with the payroll
department a new authorization for payroll deductions, in which case the new
rate shall become effective for the next payroll period commencing more than 15
days after the payroll department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one change may be made effective
during any Purchase Period. A participant may increase or lower the rate of
payroll deductions for any subsequent Purchase Period by filing with the payroll
department a new authorization for payroll deductions not later than the 15th
day of the month before the beginning of such Purchase Period.

                  (c)  All payroll deductions made for a participant are
credited to his or her account under the Plan and are deposited with the general
funds of the Company; no interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

                  (d)  On each Purchase Date, as long as the Plan remains in
effect and provided that the participant has not submitted a signed and
completed withdrawal form before that date which notifies the Company that the
participant wishes to withdraw from that Offering Period under the Plan and have
all payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Class A Common Stock reserved under the option granted to such participant with
respect to the Offering Period to the extent that such option is exercisable on
the Purchase Date. The purchase price per share shall be as specified in Section
8 of the Plan. Any cash remaining in a participant's account after such purchase
of shares shall be refunded to such participant in cash; provided, however, that
any amount remaining in participant's account on a Purchase Date which is less
than the amount necessary to purchase a full share of Class A Common Stock of
the Company shall be carried forward, without interest, into the next Purchase
Period or Offering Period, as the case may be. In the event that the Plan has
been oversubscribed, all funds not used to purchase shares on the Purchase Date
shall be returned to the participant. No Class A Common Stock shall be purchased
on a Purchase Date on behalf of any employee whose participation in the Plan has
terminated prior to such Purchase Date.

                  (e)   As promptly as practicable after the Purchase Date, the
Company shall arrange the delivery to each participant, as appropriate, of a
certificate representing the shares purchased upon exercise of his option;
provided that the Board may deliver certificates to a broker or brokers that
hold such certificates in street name for the benefit of each such participant.

                  (f)   During a participant's lifetime, such participant's
option to purchase hares hereunder is exercisable only by him or her. The
participant will have no interest or voting right in shares covered by his or
her option until such option has been exercised. Shares to be delivered to a
participant under the Plan will be registered in the name of the participant or
in the name of the participant and his or her spouse.

         10.  Limitations on Shares to be Purchased.
              -------------------------------------

                  (a)   No employee shall be entitled to purchase stock under
the Plan at a rate which, when aggregated with his or her rights to purchase
stock under all other employee stock purchase plans of the Company or any
Subsidiary, exceeds $25,000 in fair market value, determined as of the Offering
Date (or such other limit as may be imposed by the Code) for each calendar year
in which the employee participates in the Plan.

                  (b)   No more than 200% of the number of shares determined by
using 85% of the fair market value of a share of the Company's Class A Common
Stock on the Offering Date as the denominator may be purchased by a participant
on any single Purchase Date.

                  (c)   No employee shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any single Purchase Date. Not less
than thirty days prior to the commencement of any Purchase Period, the Board
may, in its sole discretion, set a maximum number of shares which may be
purchased by any employee at any single Purchase Date (hereinafter the "Maximum
Share Amount"). In no event shall the Maximum Share Amount exceed the amounts
permitted under Section 10(b) above. If a new Maximum Share Amount is set, then
all participants must be notified of such Maximum Share Amount not less than
fifteen (15) days prior to the commencement of the next Purchase Period. Once
the Maximum Share Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Purchase Periods unless revised by the Board as
set forth above.
<PAGE>

                  (d)  If the number of shares to be purchased on a Purchase
Date by all employees participating in the Plan exceeds the number of shares
then available for issuance under the Plan, the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Board shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares to
be purchased under a participant's option to each employee affected thereby.

                  (e)  Any payroll deductions accumulated in a participant's
account which are not used to purchase stock due to the limitations in this
Section 10 shall be returned to the participant as soon as practicable after the
end of the Offering Period.

         11.  Withdrawal.
              ----------

                  (a)  Each participant may withdraw from an Offering Period
under the Plan by signing and delivering to the payroll department notice on a
form provided for such purpose. Such withdrawal may be elected at any time at
least fifteen (15) days prior to the end of an Offering Period.

                  (b)  Upon withdrawal from the Plan, the accumulated payroll
deductions shall be returned to the withdrawn employee and his or her interest
in the Plan shall terminate. In the event an employee voluntarily elects to
withdraw from the Plan, he or she may not resume his or her participation in the
Plan during the same Offering Period, but he or she may participate in any
Offering Period under the Plan which commences on a date subsequent to such
withdrawal by filing a new authorization for payroll deductions in the same
manner as set forth above for initial participation in the Plan. However, if the
participant is an "insider" for purposes of Rule 16(b), he or she shall not be
eligible to participate in any Offering Period under the Plan which commences
less than six (6) months from the date of withdrawal from the Plan.

                  (c)  A participant may participate in the current Purchase
Period under an Offering Period (the "Current Offering Period") and enroll in
the Offering Period commencing after such Purchase Period (the "New Offering
Period") by (i) withdrawing from participating in the Current Offering Period
effective as of the last day of a Purchase Period within that Offering Period
and (ii) enrolling in the New Offering Period. Such withdrawal and enrollment
shall be effected by filing with the payroll department at least fifteen (15)
days prior to the end of a Purchase Period such form or forms as are provided
for such purposes.

         12.  Termination of Employment. Termination of a participant's
              -------------------------
employment for any reason, including retirement or death or the failure of a
participant to remain an eligible employee, terminates his or her participation
in the Plan immediately. In such event, the payroll deductions credited to the
participant's account will be returned to him or her or, in the case of his or
her death, to his or her legal representative. For this purpose, an employee
will not be deemed to have terminated employment or failed to remain in the
continuous employ of the Company in the case of sick leave, military leave, or
any other leave of absence approved by the Board of Directors of the Company;
provided that such leave is for a period of not more than ninety (90) days or re
employment upon the expiration of such leave is guaranteed by contract or
statute.

         13.  Return of Payroll Deductions. In the event an employee's interest
              ----------------------------
in the Plan is terminated by withdrawal, termination of employment or otherwise,
or in the event the Plan is terminated by the Board, the Company shall promptly
deliver to the employee all payroll deductions credited to his account. No
interest shall accrue on the payroll deductions of a participant in the Plan.

         14.  Capital Changes. Subject to any required action by the
              ---------------
stockholders of the Company, the number of shares of Class A Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Class A Common Stock which have been authorized for issuance
under the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Class A Common Stock covered by
each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Class A Common Stock resulting from a stock split or the payment of a
stock dividend (but only on the Class A Common Stock) or any other increase or
decrease in the number of shares of Class A Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Class A Common Stock subject to an
option.
<PAGE>

       In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under the Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, each option under
the Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the participant shall have the right to
exercise the option as to all of the optioned stock. If the Board makes an
option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the participant that the option
shall be fully exercisable for a period of twenty (20) days from the date of
such notice, and the option will terminate upon the expiration of such period.

       The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Class A Common Stock covered by each outstanding option, in the
event that the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its outstanding
Class A Common Stock, and in the event of the Company being consolidated with or
merged into any other corporation.

       15.   Nonassignability. Neither payroll deductions credited to a
             ----------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect.

       16.   Reports. Individual accounts will be maintained for each
             -------
participant in the Plan. Each participant shall receive promptly after the end
of each Purchase Period a report of his account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Purchase Period or Offering Period, as the case may be.

       17.   Notice of Disposition. Each participant shall notify the Company if
             ---------------------
the participant disposes of any of the shares purchased in any Offering Period
pursuant to this Plan if such disposition occurs within two (2) years from the
Offering Date or within twelve (12) months from the Purchase Date on which such
shares were purchased (the "Notice Period"). Unless such participant is
disposing of any of such shares during the Notice Period, such participant shall
keep the certificates representing such shares in his or her name (and not in
the name of a nominee) during the Notice Period. The Company may, at any time
during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to the Plan requesting the Company's
transfer agent to notify the Company of any transfer of the shares. The
obligation of the participant to provide such notice shall continue
notwithstanding the placement of any such legend on certificates.

       18.   No Rights to Continued Employment.  Neither this Plan nor the grant
             ---------------------------------
of any option  hereunder shall confer any right on any employee to remain in the
employ of the Company or any  Subsidiary or restrict the right of the Company or
any Subsidiary to terminate such employee's employment.

       19.   Equal Rights and Privileges. All eligible employees shall have
             ---------------------------
equal rights and privileges with respect to the Plan so that the Plan qualifies
as an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
the Plan which is inconsistent with Section 423 or any successor provision of
the Code shall without further act or amendment by the Company or the Board be
reformed to comply with the requirements of Section 423. This Section 19 shall
take precedence over all other provisions in the Plan.

       20.   Notices. All notices or other communications by a participant to
             -------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

       21.  Stockholder Approval of Amendments. Any required approval of the
            ----------------------------------
stockholders of the Company for an amendment shall be solicited at or prior to
the first annual meeting of stockholders held subsequent to the grant of an
option under the Plan as then amended to an officer or director of the Company.
If such stockholder approval is obtained at a duly held stockholders' meeting,
it must be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the company represented and voting at the meeting, or if
such stockholder approval is obtained by written consent, it must be obtained by
the majority of the outstanding shares of the Company; provided, however, that
<PAGE>

approval at a meeting or by written consent may be obtained by a lesser degree
of stockholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such lesser degree of
stockholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 423 of the Code or Rule 16b-3
promulgated under the Exchange Act ("Rule 16b-3").

         22.  Designation of Beneficiary
              --------------------------

                  (a)  A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of a Purchase Period but prior to delivery to him of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to a Purchase Date.

                  (b)  Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

         23.  Conditions Upon Issuance of Shares; Limitation on Sale of Shares.
              ----------------------------------------------------------------
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

         24.  Applicable  Law.  The Plan shall be governed by the substantive
              ---------------
laws (excluding the conflict of laws rules) of the State of California.

         25.  Amendment or Termination of the Plan. This Plan shall be effective
              ------------------------------------
on the day after the effective date of the Company's Registration Statement
filed with the Securities Exchange Commission under the Securities Act of 1933,
as amended, with respect to the shares issuable under the Plan (the "Effective
Date"), subject to approval by the stockholders of the Company within twelve
(12) months after the date the Plan is adopted by the Board of Directors of the
company and the Plan shall continue until the earlier to occur of termination by
the Board, issuance of all of the shares of Class A Common Stock reserved for
issuance under the Plan, or ten (10) years from the adoption of the Plan by the
Board. The Board of Directors of the Company may at any time amend or terminate
the Plan, except that any such termination cannot affect options previously
granted under the Plan, nor may any amendment make any change in an option
previously granted which would adversely affect the right of any participant,
nor may any amendment be made without approval of the stockholders of the
Company obtained in accordance with Section 21 hereof within 12 months of the
adoption of such amendment (or earlier if required by Section 21) if such
amendment would:

                  (a) Increase the number of shares that may be issued under
the Plan;

                  (b) Change the designation of the employees (or class of
employees) eligible for participation in the Plan; or

                  (c) Constitute an amendment for which stockholder approval is
required in order to comply with Rule 16b-3 (or any successor rule) of the
Exchange Act.
<PAGE>

                           [LOGO OF ELECTRONIC ARTS]

                   EMPLOYEE STOCK PURCHASE PLAN ACTION FORM
                    ENROLLMENT/CHANGE/WITHDRAWAL AGREEMENT

-----------              Action                        Complete Sections
 SECTION 1               ------                        -----------------
-----------              [_] New Enrollment              2, 3, 4, 6, 8
                         [_] Payroll Deduction Change    2, 4, 8
                         [_] Withdrawal                  2, 5, 8
                         [_] Beneficiary Change          2, 6, 8
--------------
 SECTION 2:         Name:___________________________________  SS#:______________
 PERSONAL
 INFORMATION        Address:____________________________________________________
--------------      Location:________________

------------        I hereby elect to participate in the Electronic Arts
 SECTION 3:         Employee Stock Purchase Plan (the "Plan") and I agree
 NEW                to be bound by its terms. Stock purchased under the Plan
 ENROLLMENT         should be registered  in my name or in my name together with
------------        the following name: ____________________________________.
                    If spouse, circle one: Joint Tenancy / Community Property.

---------------
 SECTION 4:         I hereby authorize payroll deductions from each paycheck in
 PAYROLL            that percentage of my compensation as shown below, in
 DEDUCTION          accordance with the Plan.
 AUTHORIZATION
---------------     Amount to be Deducted (Circle One): 0%  2%  3%  4%  5%  6%
                                                        7%  8%  9%  10%
------------
 SECTION 5:         Effective: _____/____/____ I will cease participating in the
 WITHDRAWAL                    Month Date Year Plan, all monies contributed to
------------                                   the Plan thus far will be
                                               returned, and I may not re-enroll
                                               until the next Offering Period.
<TABLE>
<S>                 <C>
-------------
 SECTION 6:         In the event of my death, I hereby designate  the following
 BENEFICIARY        person(s) as my beneficiary(ies) to receive all payments
-------------       and/or stock due me under the Employee Stock Purchase Plan:

                    Primary Beneficiary:                  %:     Relationship: _________________________
                                         -----------------------

                    Primary Beneficiary:                  %:     Relationship: _________________________
                                         -----------------------
                    Note:  If more than one primary beneficiary listed, please indicate % allocated to each.

                    Secondary Beneficiary:______________________ Relationship: _________________________
                    If primary  beneficiary is other than spouse,  spouse must consent to such beneficiary designation.
</TABLE>

                    _______________________________         ________________
                            Spouse Signature                      Date

------------
 SECTION 7:
------------
  ACCUMULATION I understand that my payroll deductions will be accumulated for
  AND PURCHASE the automatic purchase of shares of Common Stock at the end of
  PRICE        each Purchase Period, unless I withdraw from the Plan or become
               ineligible. The purchase price per share will be the lower of (i)
               85% of the fair market value on the first day of an Offering
               Period or (ii) 85% of the fair market value on the last day of a
               Purchase Period.

  SUCCESSIVE   I understand that this enrollment will be effective for each
  PERIODS      subsequent Offering Period unless I withdraw from the Plan or
               otherwise become ineligible to participate in the Plan. In the
               event, however, that the Offering Price for the new Offering
               Period for which I am not enrolled is less than the Offering
               Price for the Offering Period for which I am currently enrolled,
               I understand that I will automatically be withdrawn from the
               current Offering Period and re- enrolled in the new Offering
               Period unless I notify the Company to the contrary.

  REVIEW OF  I have received a copy of the Company's most recent prospectus
  PROSPECTUS which describes the Plan. I understand that my participation is in
                all respects subject to the terms of the Plan.
---------------
 SECTION 8:
 AUTHORIZATION  ______________________________________ Date:____________
---------------  Please send Original to Stock Administration - 207-5/th/ Floor
<PAGE>

                          [LOGO OF ELECTRONICS ARTS]

================================================================================

                         EMPLOYEE STOCK PURCHASE PLAN

================================================================================

Electronic Arts Inc., a Delaware corporation (the "Company"), is offering an
aggregate of 500,000 shares of its authorized but unissued Common Stock to
employees of the Company and its subsidiaries pursuant to the terms and
conditions of the Company's 2000 Employee Stock Purchase Plan (the "Plan"), as
described herein.

          THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
          SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
          ACT OF 1933, AS AMENDED (THE "1933 ACT").

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
          ANY STATE SECURITIES COMMISSION NOR HAS ANY STATE SECURITIES
          COMMISSION PASS UPON THE ACCURACY OR ADEQUACY OF THIS
          DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
          OFFENSE.
<PAGE>

                                 INTRODUCTION

     This Prospectus relates to shares of the Common Stock of the Company
offered to the Company's employees under the Plan. A Registration Statement with
respect to such shares of Common Stock has been filed with the Securities and
Exchange Commission (the "Commission"). This Prospectus, which forms a part of
that Registration Statement and sets forth information concerning the Plan and
the Company, is distributed to participants in the Plan pursuant to the 1933
Act.

     The Company maintains its executive offices at 209 Redwood Shores Parkway,
Redwood City, California 94065-1175. Its telephone number if (650) 628-1500

--------------------------------------------------------------------------------
              QUESTIONS AND ANSWERS ABOUT THE STOCK PURCHASE PLAN
================================================================================

1.   What is the Plan?

     The Plan is a payroll deduction plan that permits eligible employees to
purchase from the Company shares of Common Stock of the Company at a discount
from the market price.

                                    ------

2.   What is the history of the Plan?

     The Plan was adopted by the Company's Board of Directors (the "Board") on
May 25, 2000 and approved by the Company's stockholders on July 27,2000.

                                    ------

3.   What is the purpose of the Plan?

     The Plan has been established to provide employees of the Company and its
Subsidiaries designated by the Board as eligible to participate in the Plan with
a convenient means to acquire an equity interest in the Company through payroll
deductions, to enhance such employees' sense of participation in the affairs of
the Company and its Subsidiaries, and to provide an incentive for continued
employment.

                                    ------

4.   Who is eligible to participate in the Plan?

     Any employee of the Company or its Subsidiaries is eligible to participate
in an Offering Period (as hereinafter defined) under the Plan except the
following:

a)   employees who are not employed by the Company or Its Subsidiaries on the
     fifteenth (15th) day of the month before the beginning of such Offering
     Period;

b)   employees who are customarily employed for less than 20 hours per week;

c)   employees who are customarily employed for less than five (5) months in a
     calendar year;

d)   employees, who together with any other person whose stock would be
     attributed to such employee pursuant to Section 424(d) of the Internal
     Revenue Code of 1986, as amended (the "Code"), own stock or hold options to
     purchase stock or who, as a result of being granted an option under the
     Plan with respect to such Offering Period, would own stock or hold options
     to purchase stock possessing five percent (5%) or more of the total
     combined voting power or value of all classes of stock of the Company or
     any of its Subsidiaries; and,

e)   employees who would, by virtue of their participation in such Offering
     Period, be participating simultaneously in more than one Offering Period
     under the Plan.

                                     -----

5.   How do I become a participant in the Plan?
<PAGE>

     You may participate in the Plan by completing and returning to the
Company's Stock Administration Department, on or before the 15th day of the
month before the next Offering Date (described below), a Subscription Agreement
and Employee Stock Purchase Plan Action Form in which you authorize regular
payroll deductions. The form of the Subscription Agreement and Employee Stock
Purchase Plan Action Form will be provided to you prior to each enrollment
deadline; you will be able to choose the rate of your deductions and the
designation of your beneficiary.

     Once you become a participant, you will automatically be enrolled in the
subsequent Offering Periods unless you withdraw from the Plan or become
ineligible to participate.

                                     ------

6.   Is there a waiting period before I can enroll in the Plan?

     No, but you must enroll at least fifteen (15) days prior to the beginning
     of an Offering Period.

                                    ------

7.   What is the Offering Period?

     The Plan provides for consecutive overlapping twelve month "Offering
Periods," commencing on the first business day of March and September of each
year and ending on the last business day of February and August. The first
Offering Period will commence on September 1, 2000. The first day of each
Offering Period is referred to as the "Offering Date". The Board has the
discretion to change the duration of Offering periods. The Plan will continue
until the earliest to occur of its termination by the Board, issuance of all of
the shares of Common Stock reserved for issuance under the Plan, or May 25,
2010.

                                    ------

8.   What is the Purchase Period?

     Each Offering Period consists of two (2) six-month Purchase Periods
(individually, a "Purchase Period"), during which payroll deductions of the
participant are accumulated under this Plan. A Purchase Period will commence on
the first business day of March and on the first business day of September of an
Offering Period and will end on the last business day of the following August
and February, respectfully. The last business day of each Purchase Period is the
"Purchase Date". According to your instructions and the terms of the Plan, the
Company will make payroll deductions from your paycheck during the Purchase
Period and will use those deductions to purchase shares of Common Stock of the
Company for you on the Purchase Date.

                                    ------

9.   What is the discounted purchase price for shares under the Plan?

     The purchase price per share at which a share of Common Stock will be sold
in any Offering Period shall be eighty-five percent (85%) of the lesser of:

     (a)  the fair market value on the Offering Date; or

     (b)  the fair market value on the Purchase Date.

For purposes of the Plan, the term "fair market value" on a given date shall
mean the closing bid from the previous day's trading of a share of the Company's
Common Stock as reported on the NASDAQ National Market System.

                                     -----

10.  Can you clarify how to calculate the discount?

     To illustrate the calculation of the discounted purchase price, assume that
you participate in the first Offering Period. Also assume that the market price
of a share on the Offering Date (September 1, 2000) is $85.00 and that it
increases to $90.00 on the first Purchase Date in that Offering Period (February
28, 2000). Your discounted purchase price would be calculated as follows:

--------------------------------------------------------------------------------
 Fair Market Value        Fair Market Value        Your
        on                       on              Purchase       Your
   Offering Date            Purchase Date          Price      Discount
 -----------------        -----------------      ---------    --------
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------

 $85.00                         $90.00            $72.25       $12.75
                                              (85% of 85.00)
================================================================================

     As you can see from this example, if the fair market value of a share rises
during the Offering Period, your discount increases.

     Assume now that you remain in the Plan for the second Purchase Period
within the first Offering Period (from March 1, 2001 to August 31, 2001) and
that the market price of a share decreases from $85.00 to $75.00 on the second
Purchase Date (August 31, 2000). Your purchase price and the discount for the
second Purchase Period would be:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
  Fair Market Value         Fair Market Value                   Your
         on                        on                          Purchase                   Your
   Offering Date             Purchase Date                      Price                   Discount
  ------------------        ------------------                 --------                 --------
  <S>                       <C>                              <C>                        <C>
       $85.00                     $75.00                        $63.75                   $11.25
                                                             (85% of 75.00)
==========================================================================================================
</TABLE>

     As illustrated above, if, during an Offering Period, the fair market value
of a share falls, you will be entitled to at least the minimum 15% discount on
the lower fair market value.

     These examples only explain how the discounted purchase price is
calculated. No one can accurately predict whether the fair market value of the
Company's shares will rise or fall during any Offering Period.

                                     -----

11.  How much can I invest through the Plan?

     You may authorize payroll deductions in any whole percentage rate from a
minimum of two percent (2%) up to a maximum of ten percent (10%) of your gross
earnings. Your gross earnings mean all W-2 compensation, including, but not
limited to base salary, wages, commissions, overtime, shift premiums and
bonuses, plus draws against commissions; provided, however, that for purposes of
determining a participant's compensation, any election by such participant to
reduce his or her regular cash remuneration under Sections 125 or 401(k) of the
Code shall be treated as if the participant did not make such election.

     All payroll deductions made for you will be credited to your account under
the Plan, but will be deposited with the general funds of the Company and may be
used by the Company for any corporate purpose. No interest accrues on payroll
deductions.

                                     -----

12.  Am I limited in the number of shares I can purchase?

     Yes. If the fair market value of a share on a Purchase Date is less than
one-half of the fair market value on the applicable Offering Date, you will be
limited to buying twice the number of shares you would have been eligible to
purchase if the price on the Purchase Date was the same as the price on the
Offering Date. In addition, the Board may in the future set a maximum number of
shares that may be purchased within a given Offering Period. You will be
notified if the Board establishes such a limit.

                                     -----

13.  Are there any other limitations on the amount I can invest?

     By law, you may not purchase shares under the Plan which, with all rights
to purchase stock under all similar stock purchase plans of the Company or any
designated Subsidiary, exceed $25,000 worth of stock (measured at your
enrollment Offering Date at Fair Market Value) in any calendar year unless you
purchased less than $25,000 of stock in the previous year. This means that
because you pay only 85% of the fair market value of the shares, you may not
contribute more than approximately $21,250 toward the purchase of shares under
the Plan in any calendar year unless you have a carry forward from the previous
year.
<PAGE>

                                     -----

14.  Can I invest other than by payroll deduction?

     No. Investments may be made only by payroll deduction. You may not make
additional cash contributions to the Plan.

                                     -----

15.  When do my payroll deductions begin?

     Your payroll deductions will begin with the first pay period following the
Offering Date and will continue to the end of the Offering Period, 13 pay
periods. You will not be entitled to interest on the deductions credited to your
Plan account.

                                     -----

16.  Can I change the level of payroll deductions?

     You may increase or decrease the level of your payroll deductions for any
subsequent Purchase Period within an Offering Period by filing with the
Company's Stock Administration Department a new Employee Stock Purchase Action
Form no later than the 15th day of the month before the beginning of such
Purchase Period.

     During a Purchase Period, you may also decrease (but not increase) once the
level of your payroll deductions by filing a Employee Stock Purchase Action Form
with the Company's Stock Administration Department. The new decreased rate will
become effective for the payroll period which begins at least fifteen (15) days
after the Company's Stock Administration Department receives your new
subscription agreement.

     Only one change in the level of payroll deduction may be made effective
during a Purchase Period.

                                     -----
17.  How many shares will my payroll deductions purchase?

     On each Purchase Date, you will be entitled to purchase that number of
whole shares which is equal to the total amount of your payroll deductions
during the Purchase Period divided by your discounted purchase price, subject to
the limitations discussed above. Any amount remaining in your account that is
insufficient to purchase a whole share will be carried forward without interest
to the next Purchase Period.

     If however, you are limited in the number of shares you can purchase on a
given Purchase Date (as described in the answers to Questions 12 or 13), any
amount remaining in your account will be refunded to you in cash, without
interest, after the end of the applicable Offering Period.

                                     -----

18.  Will the Company withhold taxes when shares are purchased for me under the
Plan?

     Your payroll deductions are made by the Company after tax withholding. The
same amount of tax would be withheld whether or not you participate in the Plan.
U.S. employees (citizens and residents) may owe taxes on subsequent sales of the
shares. U.S. employees should carefully read the discussions of the tax
consequences of the Plan included in "Tax Information and ERISA" below.
International employees should consult their respective tax advisors.

                                     -----

19.  When will I receive shares?

     As soon as practicable after a Purchase Date, the Company will arrange
delivery of a certificate representing the shares purchased on the Purchase
Date. You may choose from one or more brokers selected by the Company to receive
the direct issuance of shares. Unless you specifically elect to have your shares
issued to one of these brokers, the shares will be delivered directly to you.
<PAGE>

     If you elect to have your shares issued to the broker, you will be asked to
complete a broker account application for the selected broker. In such case,
each Purchase Date, your shares will be automatically issued to the broker, who
will maintain the shares in individual participant accounts. The Company
believes that a broker will be able to transfer shares quickly and without the
risk of losing certificates in the mail. You may instruct the broker at any time
to hold, transfer or sell your shares.

                                     -----

20.  In whose name will my shares be registered?

     If your shares are delivered to you, they will be issued and registered in
your name as designated by you on your Employee Stock Purchase Plan Action Form.
If you elect to have your shares issued to the broker, the broker will maintain
your shares in the name designated by you on your broker account application.

                                     -----

21.  After becoming a stockholder, can I vote my stock?

     Yes, even though you may not be in physical possession of a stock
certificate. You will be notified by the Company whenever there is a vote of the
stockholders.

22.  Will I receive dividends and stock splits?

     After you become a stockholder, you will be entitled to receive any cash or
stock dividend paid by the Company with respect to its Common Stock.

                                     -----

23.  What happens upon a change in capitalization?

     If the Company issues additional securities to raise more capital, no
adjustments will be made. However, if there is a stock split, stock dividend or
similar change in the Company's capital structure with respect to its Common
Stock without receipt of consideration by the Company, the purchase price and
number of shares subject to outstanding purchase options under the Plan, as well
as the number of shares available under the Plan, will be adjusted accordingly.
For example, in a "two-for-one" stock split of the Company's Common Stock, the
number of shares you may purchase will be doubled and the purchase price will be
divided in half. You will be notified if such an event occurs.

     The Board may, in its sole discretion, adjust the number of shares
available under the Plan as well as the price per share of stock covered by each
outstanding purchase option, in the event that the Company effects a
reorganization, recapitalization, rights offering of other increase or reduction
of shares of the Company's Common Stock.

                                     -----

24.  What happens in a merger or consolidation?

     In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under the Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, each option under
the Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the participant shall have the right to
exercise the option as to all of the optioned stock. If the Board makes an
option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the participant that the option
shall be fully exercisable for a period of twenty (20) days from the date of
such notice, and the option will terminate upon the expiration of such period.

                                     -----

25.  Are there any restrictions on the resale of the shares I purchase?
<PAGE>

     Generally, the Plan does not impose any restrictions on the resale of
shares of Common Stock purchased under the Plan. Furthermore, the Company has
filed a Registration Statement with the Commission that satisfies most federal
securities laws requirements with respect to the resale of such shares. However,
the shares may be subject to resale restrictions imposed by state securities
laws. In addition, if you are an affiliate of the Company you may not resell
under this Prospectus any shares purchased under the Plan. Such resales must
either be described in a separate prospectus (or, statement) or be effected in
accordance with Rule 144 or another available exemption under the 1933 Act.

                                     -----

26.  When can I sell my shares?

     The Plan is intended to promote long-term investment in the Company, but
subject to the restrictions discussed above, you can sell your shares at any
time. A sale or disposition (by gift or death) of your shares may give rise to
tax consequences and the Company will report your sale on your Form W-2. See
"Tax Information and ERISA".

     In addition, as noted above, shares purchased by affiliates of the Company
are subject to special restrictions on resale. These restrictions may affect
when an affiliate may resell shares because Rule 144 imposes limitations on the
volume of shares that may be resold in any three-month period.

                                     -----

27.  How do I sell my shares?

     If you have elected to have your shares issued to one of the brokers
selected by the Company, you should directly notify that broker. In connection
with the sale, you will pay a commission rate negotiated by the Company for
sales of its shares issued under the Plan. If you wish to use a different
brokerage firm, you can instruct the broker to transfer your shares to your
selected firm.

     If your shares have been delivered directly to you, your brokerage firm
will inform you how to sell your shares and will charge you its usual
commission.

     In order for the Company to comply with federal tax laws, the brokers have
been instructed to notify the Company whenever shares purchased under the
Employee Stock Purchase Plan are sold.

                                     -----

28.  Should I be concerned about taxes?

     Yes, if you are a U.S. citizen or resident, you should review "Tax
Information and ERISA," below, for a summary for the general U.S. tax rules
applicable when you buy or sell shares under the Plan. Remember that this
discussion deals only with general rules and typical transactions and may not
cover your special situation. YOU SHOULD CONSULT YOUR TAX ADVISOR REGARDING YOUR
SPECIFIC CIRCUMSTANCES.

     If you are not a U.S. citizen or resident, you should contact your tax
advisor regarding the tax consequences in your country.

                                     -----

29.  Do I need to notify the Company when I sell my shares?

     Yes, you must notify the Company if you sell or otherwise dispose of any
shares purchased in any offering Period within two years from the Offering Date
or within twelve months from the Purchase Date on which the shares were
purchased.

                                     ----

30.  How do I withdraw from the Plan?

     You may withdraw from the Plan at any time by completing and delivering to
the Company's Stock Administration Department an Employee Stock Purchase Plan
Action Form. If your form is received at least 15 days prior to the end of an
Offering Period, the entire amount of your payroll deductions will be refunded
to you without interest as
<PAGE>

soon as possible. You may not withdraw less than all of your payroll deductions.
Unless you timely enroll in the next Offering Period, you will be ineligible to
purchase on the next Purchase Date. If you miss the withdrawal deadline, your
payroll deductions will be used to purchase stock on the next Purchase Date and
your participation in the Plan will end upon the beginning of the next Offering
Period.

                                     -----

31.  If I withdraw, can I rejoin the Plan later?

     If you voluntarily withdraw from the Plan, you may resume your
participation in the Plan during any subsequent Offering Period in the same way
you initially elected to participate in the Plan.

     However, Officers and directors subject to Section 16(b) of the Exchange
Act who voluntarily withdraw from the Plan may not participate in any Offering
Period which begins less than six (6) months from the date of withdrawal from
the Plan, unless the Board determines otherwise.

     You may also participate in a current Purchase Period under an Offering
Period and enroll in the next Offering Period by (i) withdrawing from
participation in the current Offering Period effective as of the last day of the
concurrent Purchase Period; and (ii) enrolling in the new Offering Period. You
must withdraw from the current Offering Period and enroll in the next Offering
Period by filing the Subscription Agreement and Employee Stock Purchase Plan
Action Form with the Company's Stock Administration Department at least 15 days
prior to the end of the current Offering Period.

                                     -----

32.  What happens if I leave the Company?

     Participation in the Plan does not, of course, give you any rights to
remain employed by the Company or Subsidiary. If your employment with the
Company (or Subsidiary) terminates for any reason (including death or
disability) or if you become ineligible to participate in the Plan, your payroll
deductions will immediately be discontinued. Any funds remaining in your account
will be refunded to you in your final paycheck (or to your beneficiary or
personal representative) without interest.

     Any stock acquired through your participation in prior Offering Periods
would not be affected by your withdrawal from the Plan and would be yours to
hold or sell as you choose.

     If you take an approved leave of absence for not more than 90 days (for
instance, a sick leave or military leave), or if your reemployment is guaranteed
by law or your employment agreement (if any), you will continue to be an
eligible participant in the Plan. Any other type of leave will be treated the
same as a termination of employment.

                                     -----

33.  Can I assign or transfer my rights under the Plan?

     No. The right to participate in the Plan is yours alone and may not be
assigned or transferred to anyone else. However, as will be indicated in the
Employee Stock Purchase Plan Action Form, you may select certain forms of joint
ownership for the shares you purchase under the Plan. You may also designate one
or more beneficiaries to receive your shares and/or cash remaining in your
account in the event of your death.

                                     -----

34.  If I participate in the Plan, will I receive financial information provided
to stockholders?

     Yes. If you participate in the Plan, you can request annual reports,
quarterly reports, proxy statements and other material sent by the Company to
its stockholders, even if you have not yet purchased any shares under the Plan.

                                    ------

35.  Who is the administrator of the Plan?
<PAGE>

     The Plan is administered by the Board of Directors of the Company, whose
address is the same as that of the Company's principal executive offices. The
members of the Board do not receive any compensation for administering the Plan.
Members of the Board can be contacted by writing to them at the principal
executive offices of the company, to the attention of the Stock Administration
Department.

                                     -----

36.  Who is on the Board?

     The Board currently consists of M. Richard Asher, William J. Byron, Daniel
H. Case III, Gary M. Kusin, Timothy Mott and Lawrence F. Probst, III, each of
whom is an affiliate of the Company. Mr. Probst is an officer of the Company.
Other than as disclosed herein (including disclosures in material incorporated
by reference herein), members of the Board have no material relationships with
the Company, its employees, or its affiliates.

                                     -----

37.  Who elects the Board?

     Each member of the Board is elected each year at the Company's annual
meeting of stockholders and serves until the next annual meeting or until his or
her successor is elected and qualified or until his or her earlier death,
resignation or removal. The stockholders may remove any member of the Board from
office by following certain voting procedures set forth in the Company's By-Laws
and the applicable corporate law. A director may be removed from office by the
Board if such director is declared of unsound mind or convicted of a felony.

                                     -----

38.  What if there is a dispute concerning the Plan?

     Subject to the provisions of the Plan, the Board has the authority to
construe and interpret any of the provisions of the Plan or any purchase options
granted thereunder. Such interpretations are binding on the Company and on you.

                                     -----

39.  Can the Plan be changed?

     The Board of Directors may amend or terminate the Plan at any time subject
to certain limitations described in the Plan. The Board has authority under the
Plan, for instance, to change Offering Periods, Purchase Periods and maximum
percentage contributions. The Board cannot, however, make any changes to the
Plan which will adversely affect outstanding options. However, without
stockholder approval, the Board may not increase the number of shares that may
be issued under the Plan, change the class of persons eligible to participate in
the Plan or otherwise amend the Plan in a manner that would require stockholder
approval under Rule 16b-3 of the Exchange Act.

     The Board of Directors does not contemplate making any changes at this
time. If the Board of Directors intends to change the Plan, you will receive
sufficient advance notice to allow you to consider the effect of such change on
your participation.

                                     -----

40.  How many shares are available for purchase under the Plan?

     An aggregate of 500,000 shares of the Company's authorized Common Stock has
been reserved for issuance under the Plan.

                                     -----

41.  What does the Company contribute to the Plan?

     The Company is giving you the opportunity to purchase its Common Stock at a
significant discount. The Company is also bearing all costs of administering the
Plan. The Company does not contribute to the Plan accounts for any participating
employees.
<PAGE>

                                     -----

42.  Will participation in the Plan affect my ability to contribute to an
individual retirement account or IRA?

     No, because the Plan is not a tax-qualified retirement or profit sharing
plan, your participation in it will not affect your ability to maintain or
contribute to an IRA.

                                     -----

43.  Can I get additional information about the Plan?

     The full text of the Plan is incorporated by reference as Exhibit 4.05 to
the Registration Statement of which this Prospectus is a part. These questions
and answers are simply a guide to the principal provisions of the Plan and are
qualified in their entirety by the wording of the Plan.

     You may also contact the Company's Stock Administration Department to
request a copy of the Plan or to ask any specific questions you may have
regarding the Plan and your individual participation.

                           TAX INFORMATION AND ERISA

     THE FOLLOWING DESCRIPTION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
IS BASED UPON EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS AS OF THE DATE
HEREOF. BECAUSE THE CURRENTLY APPLICABLE RULES ARE COMPLEX AND THE TAX LAWS MAY
CHANGE AND BECAUSE INCOME TAX CONSEQUENCES MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH PARTICIPANT, EACH PARTICIPANT SHOULD CONSULT
HIS OR HER OWN TAX ADVISOR CONCERNING FEDERAL (AND ANY STATE AND LOCAL) INCOME
TAX CONSEQUENCES BY PARTICIPATION IN THE PLAN. THIS PROSPECTUS DOES NOT PURPORT
TO DESCRIBE STATE OR LOCAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES FOR
PARTICIPANTS IN COUNTRIES OTHER THAN THE UNITED STATES.

                       Tax Treatment of the Participant

     Participating employees will not recognize income for federal income tax
purposes either upon enrollment in the Plan or upon the purchase of shares. All
tax consequences are deferred until a participating employee sells the shares,
disposes of the shares by gift, or dies. Payroll deductions, however, remain
fully taxable as ordinary income at the time the deduction is taken, and there
is no deferral of the ordinary income tax assessed on these amounts.

     If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable Offering Period, or if
the participant dies while owning the shares, the participant realizes ordinary
income on a sale (or a disposition by way of gift or upon death) to the extent
of the lesser of: (i) 15% of the fair market value of the shares at the
beginning of the Offering Period; or (ii) the actual gain (the amount by which
the market value of the shares on the date of sale, gift or death, exceeds the
purchase price). All additional gain upon the sale of shares is treated as long-
term capital gain. If the shares are sold and the sale price is less than the
purchase price, there is no ordinary income, and the participant has a long-term
capital loss for the difference between the sale price and the purchase price.

     If the shares are sold or are otherwise disposed of, including by way of
gift (but not death, bequest or inheritance) (in any case, a "disqualifying
disposition"), within either the one year or the two year holding periods
described above, the participant realizes ordinary income at the time of the
disqualifying disposition in the amount by which the fair market value of the
shares at the date of purchase was greater than the purchase price. This amount
will constitute ordinary income (not currently subject to withholding) in the
year of the disqualifying disposition even if no gain is realized on the sale or
if a gratuitous transfer is made. The difference, if any, between the proceeds
of sale and the fair market value of the shares at the date of purchase is a
capital gain or loss.

     Ordinary income recognized by a participant upon a disqualifying
disposition constitutes taxable compensation which will be reported on the
participant's W-2 form. The ordinary income should not constitute "wages"
subject to withholding by the Company; however, the Internal Revenue Service is
presently studying this position and may require withholding in the future.
<PAGE>

                   IRS Restructuring and Reform Act of 1998

     The IRS Restructuring and Reform Act of 1998, enacted in July 1998 modifies
and provides technical corrections to the Taxpayer Relief Act of 1997. The new
legislation generally reduces the 18-month holding period requirement to 12
months for tax years ending after December 31, 1997. Therefore, most capital
assets held more than 12 months will be subject to a maximum capital gains rate
of 20% (10% for individuals in the 15% bracket). A special lower rate of 18% (8%
for individuals in a 15% tax bracket) applies to tax years beginning after
December 31, 2000 when the asset was held more than five years. Capital gains
will continue to be offset by capital losses and up to $3,000 of capital losses
may be offset annually against ordinary income.

                         Tax Treatment of the Company

     The Company will be entitled to a deduction in connection with the
disposition of shares acquired under the Plan only to the extent that the
participant recognizes ordinary income on a disqualifying disposition of the
shares. No deduction will be possible if a participant meets the holding period
requirements. The Company will treat any transfer of record ownership of shares,
including a transfer to a broker or nominee or into "street name," as a
disposition unless it is notified to the contrary. In order to enable the
Company to learn of disqualifying dispositions and ascertain the amount of the
deductions to which it is entitled, participants will be required to notify the
Company in writing of the date and terms of any disposition of shares purchased
under the Plan.PURCHASE AND SALE AGREEMENT
                          AND JOINT ESCROW INSTRUCTIONS
                          -----------------------------

     THIS  PURCHASE  AND  SALE  AGREEMENT  AND  JOINT  ESCROW INSTRUCTIONS (THIS
"AGREEMENT") is made and entered into as of May 25, 2000 (THE "EXECUTION DATE"),
----------                                                     ---------------
by  and  between  NEVADA  DIVERSIFIED  EQUITY,  LLC,  A NEVADA LIMITED LIABILITY
COMPANY  ("BUYER"),  and  DIAMOND  KEY  HOMES,  INC.,  AN  ARIZONA  CORPORATION
           -----
("SELLER"), for the purpose of setting forth the agreement of the parties and to
provide instructions to Title Guaranty Agency of Arizona, Inc. ("ESCROW AGENT"),
                                                                 ------------
with  respect  to  the  transaction  contemplated  by  this  Agreement.

                                    RECITALS
                                    --------

     A.     Seller is the owner of the following 188 residential lots located in
Tucson,  Pima  County,  Arizona  (COLLECTIVELY,  THE  "LOTS"):

          (i)  Fifty-Five  (55)  vacant  lots known as Lots 1, 2, 3, 7-34,  127,
               128,  132  138, 171, 173, 174, 176, 177, 178, 182, 183, 187, 188,
               191, 192, 193, 234 and 236 (THE "CASTLE ROCK VACANT Lots") within
                                                -----------------------
               the  subdivision  known  as  Castle  Rock  according  to the plat
               recorded in Book 41 of Maps,  Page 1, in the Official  Records of
               Pima County, Arizona ("CASTLE ROCK");

          (ii) Twenty-seven (27) lots known as Lots 4, 5, 6, 155, 156, 161, 162,
               163,  164, 167, 168, 169, 170, 172, 175, 179, 180, 184, 189, 190,
               194,  208,  225,  227,  230, 233 and 237 within  Castle Rock (THE
               "CASTLE ROCK SOLD LOTS") together with all  improvements  thereon
                       --------------
               consisting of partially completed pre-sold homes;

          (iii)The six (6) lots known as Lots 181,  200,  221,  226, 228 and 232
               within  Castle  Rock  together  with  all  improvements   thereon
               consisting  of partially  completed  spec homes (THE "CASTLE ROCK
                                                                     -----------
               SPEC LOTS");
               ---------

          (iv) Two (2) vacant  lots known as Lots 16 and 24 (THE  "COPPER  CREEK
                                                                   -------------
               VACANT LOTS") at the  subdivision  known as Diamond Key at Copper
               -----------
               Creek according to the plat recorded in Book 50 of Maps, Page 13,
               in the Official Records of Pima County, Arizona ("COPPER CREEK");
                                                                 ------------

          (v)  Twenty-One  (21)  lots known as Lots 1-8,  10, 11,  13-15, 17-20,
               26, 27, 39 and 52 within  Copper  Creek (THE  "COPPER  CREEK SOLD
                                                              ------------------
               LOTS")  together  with all  improvements  thereon  consisting  of
               ----
               partially completed pre-sold homes;

          (vi) Two (2) lots known as Lots 51 and 53 within Copper Creek together
               with all improvements  thereon consisting of partially  completed
               spec homes (THE "COPPER CREEK SPEC LOTS");
                                ----------------------

          (vii)Eighteen  (18)  vacant lots known as Lots 41, 43, 44, 48, 49, 54,
               55, 56, 57, 58, 61, 89 and 91-96 (THE "DESERT VISTA VACANT LOTS")
                                                      ------------------------
               within the  subdivision  known as Desert  Vista  according to the
               plat  recorded  in Book 47 of  Maps,  Page  89,  in the  Official
               Records of Pima County, Arizona ("DESERT VISTA");
                                                 ------------

          (viii) Seven (7) lots  known as Lots 52,  53,  59,  60, 62, 97 and 102
               within Desert Vista (THE "DESERT VISTA SOLD LOTS")  together with
                                         ----------------------
               all  improvements   thereon  consisting  of  partially  completed
               pre-sold homes;

          (ix) Three (3) lots  known as Lot 42, 90 and 98  within  Desert  Vista
               together with all  improvements  thereon  consisting of partially
               completed spec homes (THE "DESERT VISTA SPEC LOT");
                                          ---------------------

          (x)  Two  (2)  vacant  lots  known  as Lots 4 and 5 (THE  "RITA  RANCH
                                                                     -----------
               VACANT LOTS")  within  the  subdivision   known  as  Castle  Rock
               -----------
               according  to the plat for Block "A" at Hacienda del Oro recorded
               in Book 50 of Maps,  Page 10,  in the  Official  Records  of Pima
               County, Arizona, as amended by a Declaration of Scrivener's Error
               recorded in Docket  10686,  Page 333, of the Official  Records of
               Pima County, Arizona ("RITA RANCH");
                                      ----------

          (xi) Forty-Three  (43) lots  known as Lots 1, 2, 3, 6, 10, 27, 28, 32,
               36-51,  53,  55, 56, 57, 60, 61, 63, 64, 65, 67, 68, 69 and 70-76
               within Rita Ranch (THE "RITA RANCH SOLD LOTS")  together with all
                                       --------------------
               improvements  thereon consisting of partially  completed pre-sold
               homes;

                                        1
<PAGE>
          (xii)Two (2) lots known as Lots 78 and 62 within  Rita Ranch  together
               with all improvements  thereon consisting of partially  completed
               spec homes (THE "RITA RANCH SPEC LOTS");
                                --------------------

     The  Castle  Rock,  Copper  Creek, Desert Vista and Rita Ranch subdivisions
shall,  collectively,  be  referred to herein as the "PROJECTS". The Castle Rock
                                                      --------
Vacant  Lots, the Copper Creek Vacant Lots, the Desert Vista Vacant Lots and the
Rita Ranch Vacant Lots shall, collectively, be referred to herein as the "VACANT
                                                                          ------
LOTS".  The  Castle Rack Sold Lots, the Copper Creek Sold Lots, the Desert Vista
----
Sold  Lots and the Rita Ranch Sold Lots, together with any other Vacant Lots and
Spec  Lots  which Seller, prior to the Closing (as defined below) enters into an
agreement  to sell such lots to third-party home buyers, shall, collectively, be
referred  to  herein  as  the "SOLD LOTS". The Castle Rock Spec Lots, the Copper
                               ---------
Creek  Spec  Lots, the Desert Vista Spec Lot and the Rita Ranch Spec Lots shall,
collectively,  be  referred to herein as the "SPEC LOTS". The Spec Lots together
                                              ----
with the Sold Lots shall, collectively, be referred to herein as the "LOTS UNDER
                                                                      ----------
CONSTRUCTION".  The  Lots  together  with  the  "Personal  Property"  and  the
------------
"Intangible Property" (each as hereinafter defined) are sometimes, collectively,
referred  to  herein as the "PROPERTY". The parties acknowledge that between the
Execution  Date  and  the Closing Date (as defined below) Seller may, subject to
the  limitations  set forth in Section 8.20 below, enter into Sales Contracts to
sell  certain  of  the  Vacant Lots and Spec Lots to third party home buyers, in
which  case such Lots shall thereafter be referred to herein as "Sold Lots". The
parties  further  acknowledge  that  between  the Execution Date and the Closing
Date,  it  is  possible that a Sold Lot may be cancelled by a Sold Lot Buyer, in
which event such Lot shall thereafter be referred to herein as a Vacant Lot or a
Spec  Lot,  as  the  case  may  be.

     B.  Seller  desires to sell, transfer and convey the Property to Buyer, and
Buyer desires to purchase and acquire the Property from Seller, upon and subject
to  the  terms  and  conditions  set  forth  in  this  Agreement.

                                    AGREEMENT
                                    ---------

     NOW,  THEREFORE, in consideration of the mutual covenants contained in this
Agreement  and  for  other  good  and  valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree, and
instruct  Escrow  Agent,  as  follows:

1.   PURCHASE  AND  SALE.
     -------------------

Subject  to  all of the terms and conditions of this Agreement, Seller agrees to
sell,  transfer  and  convey  to Buyer, and Buyer agrees to purchase and acquire
from  Seller,  good and marketable fee simple interest in the Property, upon and
subject  to  the  terms  and  conditions  set  forth  herein.

2.   DESCRIPTION  OF  PROPERTY.
     -------------------------

     2.1  The  Improvements.  As used herein, the term "IMPROVEMENTS" shall mean
          -----------------                             ------------
all  homes, buildings, improvements, landscaping, structures and fixtures now or
hereafter  located  on  the  Lots.

     2.2 The Real Property. As used herein, the term "REAL PROPERTY" shall mean,
         -----------------                            -------------
collectively, all of Seller's right, title and interest in and to: (a) the Lots;
(b) the Improvements; (c) all apparatus, equipment and appliances affixed to and
used in connection with the operation or occupancy of the Lots and/or any of the
Improvements;  and  (d)  all  rights, privileges and easements appurtenant to or
used  in  connection  with  the  Lots and/or any of the Improvements, including,
without limitation, all minerals, oil, gas and other hydrocarbon substances, all
development  rights, air rights, water, water rights and water stock relating to
the  Lots,  all streets, alleys, easements, rights-of-way, public ways and other
rights  of  Seller  appurtenant,  adjacent  or  connected  to  the  Lots.

     2.3  The  Personal  Property.  As used herein, the term "PERSONAL PROPERTY"
          -----------------------                             -----------------
shall  mean  (a)  all  furniture,  appliances, telephones, computers, equipment,
rugs,  artwork,  decorator  items,  supplies  and  other  personalty of any kind
contained  in  or used in connection with the "Models" (as defined below) and/or
the  sales  offices  for  the Projects to the extent owned by Seller (THE "MODEL
                                                                           -----
FURNISHINGS");  (b)  any construction trailers for the Projects owned by Seller,
-----------
if  any;  (c)  all  brochures,  pamphlets,  supplies,  marketing  materials  and
information  and  all  salesperson  files  relating  to the Projects; (d) all of
Seller's  right,  title  and  interest  in  and  to  any other tangible personal
property,  furnishings, equipment and supplies situated on or used in connection
with  the  Lots,  the  Models  or  the  Projects; with such Personal Property to
include,  without  limitation, all of the personal property described on Exhibit
                                                                         -------
"A-1"  attached  hereto; and (e) the furniture, fixtures, equipment, appliances,
----
computers,  telephones  and  other  personalty  owned  by  Seller and located at
Seller's  Tucson  office  located  at  6740  N.  Oracle Road, Suite 151, Tucson,
Arizona 85704, including, but not limited to, the personal property described on
Exhibit  "A-2" attached  hereto.
-------------

                                        2
<PAGE>
     2.4 The Intangible Property. As used herein, the term "INTANGIBLE PROPERTY"
         -----------------------                            -------------------
shall  mean  all  of Seller's right, title and interest in and to the intangible
property  owned  by  Seller  or  used by Seller in connection with the Lots, the
Models  (as defined below) or any other part of the Projects and/or the Personal
Property,  including,  without  limitation,  (a)  a separate Purchase Agreement,
Escrow  Instructions and Receipt for each of the Sold Lots (including any Vacant
Lots  and  Spec  Lots  which  Seller, between the Execution Date and the Closing
Date,  enters  into a contract to sell to third-party home buyers) together with
any  existing  addendums  and  amendments  thereto  by  and  between  Seller and
third-party  home  buyers  of  the  Sold  Lots  (EACH  A  "SOLD  LOT BUYER" AND,
                                                           ---------------
COLLECTIVELY,  THE  "SOLD  LOT BUYERS") together with all plot plans, documents,
                     ----------------
materials  and  information  of any kind provided to or executed by the Sold Lot
Buyers  and  all  earnest  money deposits and other payments and deposits of any
kind  paid  prior  to  the Closing by the Sold Lot Buyers pursuant to such sales
contracts  (COLLECTIVELY, THE "SALES CONTRACTS"); (b) all of the lessees' rights
                               ---------------
under  the  lease agreements described on Exhibit "B" to this Agreement relating
                                          -----------
to  the  model  homes  within the Projects (THE "MODEL LEASES") relating to Lots
                                                 ------------
129,  130  and 131 at Castle Rock, Lots 21, 22 and 23 at Copper Creek, Lot 42 at
Desert Vista and Lots 7, 8 and 9 at Rita Ranch together with the model homes and
improvements constructed thereon (COLLECTIVELY, THE "MODELS"), subject, however,
to  the  provisions  contained  within  Section  2.5  below;  (c)  the contracts
identified  on  Exhibit  "C"  attached  hereto  (COLLECTIVELY, THE "CONSTRUCTION
                ------------                                        ------------
CONTRACTS")  which  Seller  represents to be all of the contracts between Seller
---------
and  all  contractors,  subcontractors, materialmen, suppliers and professionals
regarding  the Lots and which Seller represents to include all work necessary to
complete  construction  of  all  homes  and  improvements  on  the  Lots  Under
Construction;(d)  all architectural, engineering and other plans, specifications
and  drawings and all modifications thereto for all homes heretofore offered for
sale  by Seller within the Projects and all architectural, engineering and other
plans,  specifications  and  drawings  necessary  to  construct  the  homes  and
improvements  heretofore  constructed  within  the Projects as well as any homes
which  are  in  the  process  of  being  constructed or which are proposed to be
constructed  on  any  of  the  Lots  (COLLECTIVELY, THE "PLANS"); (e) all books,
records,  files (including salesperson files), documents, reports, test results,
environmental  assessments,  engineering reports, as-built plans, specifications
and  other  similar  documents  and  materials  relating  to the use, operation,
maintenance,  repair,  construction  or  fabrication  of  all or any part of the
Property  or  the  Projects;  (f)  all  transferable  business  licenses and all
architectural,  site,  building,  landscaping  and  other  permits  and  all
applications,  approvals, authorizations and other entitlements affecting any of
the  Lots or any other portion of the Projects; (g) the Declarant's rights under
the  Declarations  of  Covenants,  Conditions  and Restrictions that affect each
Project  to  the  extent Seller owns such rights (THE "DECLARANT'S RIGHTS"); (h)
                                                       ------------------
all  transferable  guarantees and warranties relating to all or any of the Lots,
the  Improvements,  the Personalty, the Intangible Property or any other part of
the  Projects;  (i)  all  deposits  of  any  kind  paid by Seller related to the
Projects  and/or  the Lots, including, without limitation, all security deposits
and  utility deposits; and (j) any of the leases (including construction trailer
leases)  and agreements described on Exhibit "D" attached hereto (THE "OPERATING
                                      ----------                       ---------
AGREEMENTS")  which,  during  the  Due  Diligence Period, Buyer, in its sole and
----------
absolute discretion, may elect, by providing written notice to Seller and Escrow
Agent,  to assume Seller's obligations thereunder which arise after the Closing,
with  Seller  to remain responsible for and to indemnify and hold Buyer harmless
from  all claims and demands relating to costs, expenses and obligations payable
under  such  assumed Operating Agreements, if any, for periods prior to Closing.

     2.5  Model  Leases.  The  parties acknowledge that the Models on Rita Ranch
          -------------
Lots 8 and 9 and Copper Creek Lot 22 (THE "SOLD MODELS") are subject to existing
                                           -----------
sale  contracts  between  the  lessors  of such Sold Models and third-party home
buyers  (THE  "MODEL  SALE  AGREEMENTS"),  pursuant to which the Sold Models are
              ------------------------
anticipated  to  be conveyed to such third-party home buyers sometime during the
ninety  (90)  day  period  following  the  Execution  Date.  Notwithstanding the
provisions  contained  herein,  the  Model Leases for the Sold Models (THE "SOLD
                                                                            ----
MODEL  LEASES")  shall  not be assigned or conveyed to Buyer unless or until (a)
-------------
the  Model  Sale Agreement(s) for the Sold Model(s) is cancelled and (b) Seller,
within  ten  (10)  days  of  such  cancellation  of the corresponding Model Sale
Agreement(s)  but not later than one hundred twenty (120) days after the Closing
Date,  provides Buyer with written notice of its election to assign to Buyer the
affected  Sold Model Lease(s). Upon any election by Seller pursuant to provision
(b)  in  the  preceding sentence, Seller shall, within ten (10) days thereafter,
convey the subject Model Sale Agreement(s) to Buyer by an Assignment of Lease(s)
in  the  form attached hereto as Exhibit "I". Seller shall not modify any of the
                                 -----------
Model  Sale  Agreements without the prior written consent of Buyer. On or before
the  respective closings under the Model Sale Agreements, Buyer shall remove all
the  Model  Furnishings  from  the  subject  Sold  Models.

3.   PURCHASE  PRICE.
     ---------------

     3.1  Purchase  Price  Calculation.  Subject to the adjustments provided for
          ----------------------------
herein,  the  purchase price for the Property (THE "PURCHASE PRICE") shall equal
                                                    --------------
Eight  Million  Four  Hundred  Fifty Thousand Dollars ($8,450,000). The Purchase
Price  shall  be  payable  as  follows:

     3.1.1  Deposit.  Concurrently  with the "Opening of Escrow" (as hereinafter
            -------
defined),  Buyer shall deposit into "Escrow" (as hereinafter defined) the sum of
One Hundred Thousand Dollars ($100,000), which amount together with any interest
earned  thereon  shall,  collectively,  be  referred to herein as the "DEPOSIT".
                                                                       -------
Escrow  Agent  shall  invest  the  Deposit  in  insured  money  market accounts,
certificates  of  deposit or United States treasury bills, as Buyer may instruct
from  time  to  time,  provided  that  such  investments are federally issued or
insured. At the "Closing" (as hereinafter defined), the Deposit shall be paid to
Seller  and  credited  against the Purchase Price. In the event that the sale of
the  Property  is  not  consummated for any reason other than a default by Buyer
and, as a result, Buyer elects to cancel this Agreement as permitted herein, the
Deposit  shall,  upon  such  cancellation,  be  immediately  returned  to Buyer.

     3.1  .2  Balance.  At the Closing, Buyer shall pay to Seller the balance of
              -------
the Purchase Price net of all adjustments as provided herein, which amount shall
be  paid  by  wire  transfer  of  immediately  available  federal  funds.

                                        3
<PAGE>
     3.2  Adjustments to Purchase Price. The purchase price analysis attached to
          -----------------------------
this  Agreement as  Exhibit "E" (THE "PURCHASE PRICE SUMMARY") SETS forth, among
                     ----------       ----------------------
other  things,  amounts,  assumptions  and  other  information which Buyer deems
critical  to its agreement to pay the Purchase Price, and Seller covenants that,
to  its best knowledge, such information set forth on the Purchase Price Summary
is  accurate  as  of the Execution Date. At the Closing and after the Closing to
the  extent  determined  at  Closing,  the  Purchase  Price shall be adjusted as
follows:

          (a)  In the event  closings for the sale of Lots 161 and 230 at Castle
               Rock,  Lot 57 at Rita Ranch and Lot 102 at Desert Vista  pursuant
               to the applicable  Sales Contracts occur prior to the Closing (as
               defined  below),  Seller  shall be  entitled  to receive  all net
               proceeds,  if any,  payable to the sellers  under the escrows for
               those Sales Contracts; however, in such event, the Purchase Price
               shall  be  reduced  by an  amount  equal  to the sum of the  "Lot
               Purchase  Price" and the total and final "Work in  Progress"  for
               such Lots as shown on page 2 of the Purchase  Price  Summary,  as
               such will be updated through the Closing Date.

          (b)  In the event that closings  under any Sales  Contracts in Section
               3.2 (a) above occur prior to the Closing (as defined below),  the
               Purchase  Price  shall  be  reduced  by an  amount  equal  to the
               "Contract  Price"  as shown on the  Purchase  Price  Summary,  as
               updated  through  the  Closing  Date  less any  "Buyer  Deposit",
               "Inside Sales Commission", "Preferred Lender Incentive", "Outside
               Sales  Commission",  "Cost to Complete" (as calculated on May 26,
               2000) and "Sales Tax" for such Lots as set forth on the  Purchase
               Price  Summary  updated  through the Closing Date plus any actual
               seller closing cost paid on the escrow closing statement for such
               unit and a fifteen  hundred  dollar  ($1500)  allowance  to cover
               warranty  expenses that will remain the obligation of the Seller.
               Notwithstanding  any other provision  contained in this Agreement
               or any exhibit hereto, Buyer shall not have any obligation to pay
               any "Costs to Complete"  or any "Sales Tax" or any other  amounts
               with respect to the Lots for which an  adjustment  is made to the
               Purchase Price pursuant to this Section 3.2 (b).

          (c)  The  Purchase  Price  shall be reduced by an amount  equal to the
               total amount of all deposits and other  payments of any kind paid
               by all Sold Lot  Buyers at any time  prior to the  Closing to the
               extent that such  amounts are not,  at the  Closing,  held by the
               escrow  agents under the Sales  Contracts  (and which such escrow
               agents must be  irrevocably  committed to release to Buyer as the
               seller under such Sales  Contracts upon the  respective  closings
               under such Sales Contracts).

          (d)  The  Purchase  Price  shall be reduced by an amount  equal to the
               amount, if any, by which the construction costs paid by Seller to
               third-parties with respect to each Sold Lot is, as of the Closing
               Date,  less than the amount  identified  as "Work in Progress" on
               the Purchase  Price  Summary as updated  through the Closing Date
               and thereafter. WORK IN PROGRESS", as shown on the Purchase Price
                               ----------------
               Summary  attached  hereto as Exhibit "E",  shall mean and include
                                            ----------
               all costs of construction  on and materials  supplied to the Lots
               Under Construction pursuant to the Construction Contracts through
               April 25, 2000. However, prior to Closing, the "Work in Progress"
               as  shown  on the  Purchase  Price  Summary  and as  used in this
               Agreement  shall be updated to include all costs of  construction
               on and materials supplied to Lots Under Construction  pursuant to
               the Construction Contracts through May 25, 2000.

          (e)  The  Purchase  Price  shall be reduced by an amount  equal to the
               amount by which the sale  prices,  lot  premiums,  lot prices and
               discounts in any addendum to existing Sales  Contracts or any new
               Sales  Contracts  entered into between the Execution Date and the
               Closing  vary from the  limitations  contained  in  Section  8.20
               below.

          (f)  In the event the Closing is delayed  pursuant to any of the terms
               in this  Agreement,  Seller shall  continue to diligently  and in
               good faith proceed with the construction of the homes and related
               improvements on Lots under  Construction  and Seller shall pay as
               and  when  due  all  costs   incurred  in  connection   therewith
               consistent  with the Purchase Price  Summary,  and in such event,
               the  Purchase  Price shall be  increased  by any amounts  paid by
               Seller for work performed on and materials supplied to Lots Under
               Construction  during the period from May 26, 2000 to the eventual
               Closing Date,  provided such amounts (a) are included  within the
               cost to complete as set forth on the  Purchase  Price  Summary or
               (b)  are  for  options  hereafter   selected  and  change  orders
               hereafter  made for the Lots Under  Construction  as permitted in
               this Agreement.

          (g)  The Purchase Price may be further  reduced in accordance with the
               last sentence of 6.2.4 below.

                                        4
<PAGE>
     On  the  Closing Date, the parties shall update the Purchase Price Summary,
and  upon such compilation, the parties shall execute the updated Purchase Price
Summary  and  forward  a  copy thereof to Escrow Agent. On the Closing Date, the
Purchase  Price  shall be reduced in accordance with this paragraph to take into
account  any  corrections  or  changes in the updated Purchase Price Summary, if
any.  On  the  Closing  Date,  Buyer  shall also receive as a credit against the
Purchase  Price an amount equal to the sum of all unpaid rental, if any, payable
to  the lessors under the "Model Leases" (as defined below) and any amounts due,
if  any,  to  any  parties  under  any  Operating Agreements assumed by Buyer in
accordance  with  Section  2.4(j)  above  for periods prior to the Closing Date.

     3.3  Post-Closing  Adjustments.  Seller shall be solely responsible for all
          -------------------------
work  done  and materials supplied to the Lots and the Property on or before May
25,  2000,  and  Seller  shall,  at  Closing, pay all such unpaid amounts to the
contractors  and  materialmen to whom such amounts are due. Seller shall provide
Buyer  and  Escrow  Agent  with  evidence  of  such  payments  together  with
corresponding lien waivers relating to such payments. On or before May 29, 2000,
Seller  shall  provide  Buyer  with  a detailed summary and list of all "Work in
Progress"  through  May 25, 2000. If, after the Closing Date, any subcontractor,
materialman  or  supplier or other person or entity makes any demand or claim or
takes  any  action  or  initiates  any  action  with respect to any improvements
constructed  or  materials  supplied  prior  to  May 26, 2000, Seller and Saxton
Incorporated,  a  Nevada  corporation, shall indemnify and defend Buyer and hold
Buyer  harmless  from  any  and  all  such  claims,  demands and actions and any
damages,  losses,  costs,  fees (including, without limitation, attorneys' fees)
incurred  in  connection  with  or  as  a result of any such claims, demands and
actions,  regardless of when any such claims, demands and actions are initiated.
In  addition,  if, during the three (3) month period after the Closing Date, any
adjustments  to  the  Purchase  Price are determined to be warranted pursuant to
Section  3.2  above,  Seller agrees to recalculate the Purchase Price and pay to
Buyer  an  amount  equal to the appropriate adjustment in the Purchase Price. At
Closing,  Escrow  Agent shall establish and Seller shall fund a holdback account
in  the  amount  of  Three  Hundred  Thousand  Dollars ($300,000) (THE "HOLDBACK
                                                                        --------
ACCOUNT")  for  the purpose of paying any amounts Seller may be obligated to pay
-------
to  Buyer  under  this Section 3.3, and Seller hereby grants to Buyer a lien and
security  interest  in the Holdback Account. Seller hereby agrees to execute any
and  all  documents  that  may  be  necessary  in  order to perfect the security
interest  granted  by  Seller  to Buyer in the Holdback Account. Escrow Agent is
hereby  authorized  and instructed to release from funds in the Holdback Account
to Buyer any amounts which are determined to be owed by Seller to Buyer pursuant
to  this  Section 3.3. On the forty-sixth (46th) day following the Closing Date,
Escrow  Agent shall release to Seller from funds held in the Holdback Account an
amount  equal  to  $  150,000 less the amount of any payments previously made to
Buyer  from  the  Holdback  Account  and the amount of any claims of entitlement
theretofore  made by Seller with respect to amounts in the Holdback Account. The
balance  of  any  funds in the Holdback Account which are not paid or payable to
Buyer pursuant to this Section 3.3 shall be returned to Seller upon the later to
occur  of  (a)  the  ninetieth (90th) day following the Closing Date and (b) the
resolution of any dispute between Seller and Buyer under this Section 3.3. Buyer
shall  provide  Seller  and  Escrow  Agent with a written notice of any claim of
entitlement  to  receive  any  funds  in the Holdback Account (as defined below)
together  with  a detailed description of the basis for such claim (A "NOTICE OF
                                                                       ---------
CLAIM").  Within  five (5) days of Seller's receipt of a Notice of Claim, Seller
-----
shall  provide  Buyer  and  Escrow Agent with a written detailed response either
approving  the  payment of such claim from funds held in the Holdback Account or
contesting  such claim together with the basis for Buyer's denial of such claim.
Any  dispute with respect to the Holdback Account (A "DISPUTE") shall be settled
                                                      -------
by  binding  arbitration  in  Pima  County,  Arizona  in  accordance  with  the
Construction  Industry Arbitration Rules of the American Arbitration Association
then  currently  in  effect. The arbitrator for such arbitration procedures (THE
"ARBITRATOR") shall be agreed upon by the parties, but if the parties are unable
to  agree  upon  an  arbitrator  within  ten  (10) days of the inception of such
Dispute,  the  arbitrator  will  be  appointed  by  the  American  Arbitration
Association  in  accordance  with  the  arbitration  rules  referenced  above.
Arbitration  may be commenced upon written demand of any party to this Agreement
for  resolution of such Dispute. The arbitration hearing shall be conducted at a
time  and  place  set  by  the Arbitrator, provided that such hearing must occur
within  thirty  (30)  days of the appointment of the Arbitrator. The decision of
the  Arbitrator shall be issued within ten (10) days of the hearing and shall be
final,  and judgment may be entered upon it in accordance with applicable law in
any  court  having  jurisdiction  thereof. The nonprevailing party shall pay all
costs  of  the  arbitration  including  the costs and fees, including reasonable
attorneys fees, of the prevailing party. Notwithstanding any provision contained
in  the  Construction  Industry  Arbitration  Rules  of the American Arbitration
Association,  a party to this Agreement may only appeal or otherwise challenge a
decision  of  the Arbitrator for the reasons set forth in A.R.S.  12-1512(A) (1)
(2)  or  (3)  and  for  no  other  reasons.

4.  OPENING  OF  ESCROW.
    -------------------

Upon the Execution Date, Buyer and Seller shall cause an escrow ("ESCROW") to be
opened  with  Escrow Agent (THE "OPENING OF ESCROW") by delivery to Escrow Agent
                                 -----------------
of  a fully executed copy of this Agreement. Escrow Agent shall promptly deliver
to  Buyer  and  Seller written notice of the date of the Opening of Escrow. This
Agreement  shall  constitute  escrow instructions to Escrow Agent as well as 'he
agreement of the parties. Escrow Agent is hereby appointed and designated to act
as  Escrow  Agent  and is hereby instructed to deliver, pursuant to the terms of
this  Agreement,  the  documents and funds to be deposited into Escrow as herein
provided.  The  parties hereto shall execute such additional escrow instructions
(not  inconsistent  with  this  Agreement as determined by counsel for Buyer and
Seller)  as  Escrow  Agent  may  deem  reasonably  necessary for its protection,
including Escrow Agent's general provisions (as may be modified by Buyer, Seller
and  Escrow  Agent). In the event of any inconsistency between the provisions of
this  Agreement  and such additional escrow instructions, the provisions of this
Agreement  shall  govern.

                                        5
<PAGE>
5.  ACTIONS  PENDING  CLOSING.
    -------------------------

     5.1  Due  Diligence.
          --------------

          5.1.1  Property  Documents.  On or before the first (1st) Business Day
                 -------------------
after  the  Execution  Date (THE "DOCUMENT DELIVERY DATE"), Seller shall, at its
                                  ----------------------
sole cost and expense, provide to Buyer true, correct and complete copies of all
of  the  documents  described  on Exhibit "F" attached to this Agreement, to the
                                  ----------
extent  that  such documents exist and are in Seller's possession (collectively,
the  "DELIVERED  DOCUMENTS")  During the course of the Escrow, Seller shall make
      --------------------
available  to  Buyer  for its review and copying during normal business hours at
Seller's  company  office or at the sales office for the Projects, true, correct
and  complete  copies  of  all contracts, documents, reports, books, records and
other  materials  relating  to the Property, to the extent that such items exist
and  are  in  Seller's  possession  (collectively,  together  with the Delivered
Documents,  the  "PROPERTY  DOCUMENTS") including, without limitation, the items
                  -------------------
described  on  Exhibit  "G" attached hereto.
               -----------

          5.1.2  Buyer's  Diligence  Tests.  At  all  reasonable  times from the
                 -------------------------
Execution  Date  until  5:00  p.m.,  Phoenix  time,  on  June  5, 2000 (THE "DUE
                                                                             ---
DILIGENCE  PERIOD"),  Buyer, its agents and representatives shall be entitled at
-----------------
Buyer's  sole  cost  and  expense  to:  (a) enter onto the Lots and the Projects
during normal business hours to perform all inspections, investigations, studies
and  tests of the Property (including, without limitation, physical, structural,
mechanical,  architectural,  engineering,  soils, geotechnical and environmental
tests  that  Buyer deems reasonable); (b) review all Property Documents; and (c)
investigate  such  other  matters  as  Buyer  may desire. Buyer's entry onto and
inspections of the Property in accordance with the terms hereof shall not damage
the  Property  in  any  respect.  Any  entry by Buyer onto the Projects shall be
subject  to,  and  shall  be  conducted in accordance with, all applicable laws.
Buyer  shall keep the Property free and clear of any mechanic's or materialmen's
liens  arising  out of any entry onto or inspection of the Property. Buyer shall
indemnify,  protect,  defend  and  hold  Seller (and Seller's members, managers,
agents,  employees  and  representatives)  harmless from and against any and all
claims  (including,  without  limitation,  claims  for  mechanic's  liens  or
materialmen's  liens),  causes of action, demands, obligations, losses, damages,
liabilities,  judgements,  costs  and  expenses  (including, without limitation,
reasonable  attorneys' fees, charges and disbursements) (COLLECTIVELY, "CLAIMS")
in  connection with or arising out of any inspections carried on by or on behalf
of  Buyer  pursuant to the terms hereof; provided, however, that Buyer shall not
indemnify  Seller for any Claims caused by Seller's negligence or misconduct. In
the  event  that this Agreement is terminated for any reason, Buyer shall repair
any  damage  to the Property caused by its entry thereon and restore the same to
the  condition  in  which it existed prior to such entry. The provisions of this
Section  5.1.2  shall  survive  the  Closing  or the earlier termination of this
Agreement.

          5.1  .3  Buyer's  Termination Right. Buyer shall have the right at any
                   --------------------------
time  on  or before the last day of the Due Diligence Period (THE "DUE DILIGENCE
                                                                   -------------
TERMINATION DATE") to terminate this Agreement by delivering a written notice of
----------------
such  termination to Seller and Escrow Agent if Buyer determines in its sole and
absolute  discretion  that  the Property or this Agreement are not acceptable to
Buyer,  in  which case the Deposit shall he returned to Buyer and this Agreement
shall  automatically  terminate and be of no further force or effect and neither
party shall have any further rights or obligations hereunder other than pursuant
to  any  provision hereof which are specified to survive the termination of this
Agreement. In the event that Buyer fails to deliver a written termination notice
to Seller and Escrow Agent on or before the Due Diligence Termination Date, then
Buyer shall be deemed to have unconditionally waived its termination right under
this  Section  5.1.3.

     5.2  Title.

          5.2.1  Deliveries  by  Seller.  As  soon  as  practical  following the
                 ----------------------
Execution  Date,  Seller  shall  cause  Escrow  Agent  to provide to Buyer (a) a
separate  current  commitment  for  an extended coverage owner's policy of title
insurance  for  the  Lots within each of the four Projects as well as a separate
title report for the Models which are subject to the Model Leases (COLLECTIVELY,
THE  "TITLE  REPORTS")  and (b) copies of all documents referenced as exceptions
      --------------
therein  (COLLECTIVELY,  THE  "TITLE  DOCUMENTS").
                               ----------------

          5.2.2  Buyer's  Review  of  Title.  Buyer  shall  have  until five (5)
                 --------------------------
Business  Days  following its receipt of the Title Documents to notify Seller in
writing  of  any objection which Buyer may have to any matters reported or shown
in  the  Title  Documents  or  any  updates thereof ("BUYER'S OBJECTION LETTER")
                                                      ------------------------
(provided,  however, that if any such updates are received by Buyer, Buyer shall
have  an  additional  two  (2)  Business  Days following Buyer's receipt of such
update  and  copies  of  all  documents  referenced  therein to notify Seller of
objections  to  items  shown  on any such update which were not disclosed on the
previously delivered Title Documents). Matters reported in or shown by the Title
Documents  (or  any  updates  thereof)  and  not  timely objected to by Buyer as
provided  above  shall be deemed to be "PERMITTED EXCEPTIONS." Seller shall have
                                        --------------------
no obligation to cure or correct any matter objected to by Buyer. However, on or
before  the  second  (2nd)  Business  Day  following Seller's receipt of Buyer's
Objection  Letter,  Seller  may  elect,  by  delivering  written  notice of such
election to Buyer and Escrow Agent ("SELLER'S RESPONSE") whether to cause Escrow
                                     -----------------
Agent  to  remove  or  insure  over any matters objected to in Buyer's Objection
Letter.  If  Seller fails to deliver Seller's Response within the time frame set
forth  above, it shall be deemed to be an election by Seller not to cause Escrow
Agent to so remove or insure over such objections. If Seller elects not to cause
Escrow Agent to so remove or insure over such matters, then Buyer must elect, by
delivering  written  notice  of  such  election to Seller and Escrow Agent on or
before  the  earlier  to  occur  of  (a) the second (2nd) Business Day following
Buyer's receipt of Seller's Response, (b) if no Seller's Response is received by

                                        6
<PAGE>
Buyer,  the  second  (2nd) Business Day following the date on which Seller shall
have been deemed to have responded, as provided above or (c) the Closing Date to
(i)  terminate  this  Agreement,  in which case the Deposit shall be returned to
Buyer  and  neither party shall thereafter have any rights or obligations to the
other  hereunder  other  than  pursuant to any provision in this Agreement which
expressly  survives  such  termination  or  (ii)  proceed  to  a  timely Closing
whereupon such objected to exceptions or matters shall be deemed to be Permitted
Exceptions.  In  the  event  that  Buyer fails to make such election on a timely
basis, then Buyer shall be deemed to have elected to proceed to a timely Closing
in  accordance with the preceding clause (ii).  Notwithstanding the foregoing or
any  other provision contained in this Agreement, Seller shall, at its sole cost
and  expense, cause any and all financial liens, encumbrances and assessments of
any  type  to be paid in full and removed from title at or prior to the Closing,
and  such  payment  and removal shall be specified as a title requirement in the
Title Reports. Also, Seller shall be responsible for providing the title company
with  any  affidavits,  indemnities  and other agreements and items as the title
company  may require to insure over any mechanics or materialmen's liens arising
from  Seller's  work  on the Lots and within the Projects. In the event that any
time period provided above has not expired as of the date scheduled for Closing,
the  Closing  shall  be  extended  to  the  first  (1st)  Business Day after the
expiration  of  such  periods.

          5.2.3  Condition  of  Title at Closing. Upon the Closing, Seller shall
                 -------------------------------
sell, transfer and convey to Buyer fee simple title to the Real Property by duly
executed  and acknowledged deeds in the form of Exhibit "H" attached hereto (THE
                                                ----------
"DEEDS"),  subject  only  to the applicable Permitted Exceptions. Also, upon the
Closing,  the  Model  Leases  shall  be  conveyed  to  Buyer subject only to the
Permitted  Exceptions.

6.  CONDITIONS  TO  CLOSING.
    -----------------------

          6.1  Buyer's  Closing Conditions.  The obligation of Buyer to complete
               ---------------------------
the  transaction  contemplated  by  this  Agreement  is subject to the following
conditions  precedent  (and conditions concurrent, with respect to deliveries to
be  made by the parties at the Closing) (the Buyer's Closing Condition's), which
conditions  may  be  waived,  or  the time for satisfaction thereof extended, by
Buyer only in a writing executed by Buyer.

          6.1  Title.  Escrow  Agent shall be prepared and irrevocably committed
               -----
to  issue  to  Buyer (with an effective date not earlier than the Closing Date),
(a)  extended owner's policies of title insurance in favor of Buyer for the Lots
(i)  showing fee title to the Lots vested in Buyer, (ii) with liability coverage
in  an  amount  satisfactory  to Buyer, (iii) with those endorsements reasonably
requested  by  Buyer (provided that such endorsements are available and are paid
for  by  Buyer  in  accordance  with  the  terms  hereof) and (iv) containing no
exceptions  other  than  the applicable Permitted Exceptions (THE "OWNER'S TITLE
                                                                   -------------
POLICIES")  and  (b) a leasehold policy of title insurance in favor of Buyer for
--------
the  Models  subject  to  the  Model Leases (i) showing fee title to such Models
vested  in  the lessor under the Model Leases and showing the leasehold interest
therein  vested in Buyer, (ii) with liability coverage in an amount satisfactory
to  Buyer,  (iii)  with  those  endorsements  reasonably  satisfactory  to Buyer
(provided  that  such  endorsements  are  available and are paid for by Buyer in
accordance  with  the terms hereof) and (iv) containing no exceptions other than
the  applicable  Permitted  Exceptions  (THE  "LEASEHOLD  POLICIES").
                                               -------------------

          6.1.2  Seller's  Due  Performance.  All  of  the  representations  and
                 --------------------------
warranties  of  Seller  set  forth  in this Agreement shall be true, correct and
complete  in  all  material  respects  as of the Closing Date, and Seller, on or
prior  to the Closing Date, shall have complied with and/or performed all of the
obligations,  covenants  and  agreements  required  on  the part of Seller to be
complied  with  or  performed  pursuant  to  the  terms  of  this  Agreement.

          6.1.3  Physical  Condition  of Property. The physical condition of the
                 --------------------------------
Property shall be substantially the same on the Closing Date as on the Execution
Date,  except  for  any  construction progress and any reasonable wear and tear.

          6.1.4 Bankruptcy. No action or proceeding shall have been commenced by
                ----------
or  against  Seller  or Saxton Incorporated (or any affiliates of such entities)
under  the federal bankruptcy code or any state law for the relief of debtors or
for  the  enforcement  of the rights of creditors, and no attachment, execution,
lien  or  levy  shall  have  attached to or been issued with respect to Seller's
interest  in  the  Property  or  any  portion  thereof.

          6.1.5  Model  Leases. At the Closing and subject to the qualifications
                 -------------
set forth in Section 2.5 above, Seller shall assign all of its rights, title and
interests and remedies under the Model Leases (except for the Sold Model Leases)
to Buyer, and Buyer shall assume the obligations of Seller with respect thereto,
pursuant  to  one  or  more  assignment  and assumption of leases in the form of
Exhibit "I" attached  hereto  (THE  "ASSIGNMENTS  OF  LEASE").
----------                           ----------------------

          6.1.6  Consent of Lessors. At least two (2) Business Days prior to the
                 ------------------
Closing,  Seller  shall provide to Buyer a Lessors' Consent to Assignment in the
form  attached  hereto  as  Exhibit  "J"(THE "CONSENT OF LESSORS") regarding the
                            ------------      ------------------
status  of  the  Model Leases and providing the consent of the lessors under the
Model  Leases to the assignment of the Model Leases to Buyer, which must also be
consented  to  by  any  holders of liens and encumbrances on the Models who must
agree  to  recognize  the  existence  of  and  abide  by  the  Model  Leases.

          6.1.7  Bills  of  Sale. At the Closing, Seller shall transfer to Buyer
                 ---------------
all  of  the Personal Property and the Intangible Property, in each case free of
all  liens  and  encumbrances (other than the Permitted Exceptions), pursuant to
one  or  more  bills  of  sale, assignment and assumption in the form of Exhibit
                                                                         -------
"K" attached hereto  (THE  "BILL  OF  SALE").  However,  in the event that Buyer
--                          --------------

                                        7
<PAGE>
assigns  its rights under this Agreement, as permitted under Section 16.7 below,
Buyer  may,  in  its  sole discretion, require that that portion of the personal
property described on Exhibit "A-2" be separately conveyed to Nevada Diversified
                      ------------
Equity,  LLC, as opposed to the assignee of Buyer's rights under this Agreement,
and  in  such  event,  Seller  shall  execute a separate Bill of Sale separately
conveying  such  portion of the personal property directly to Nevada Diversified
Equity,  LLC.

          6.1.8  Assignments  of  Construction  Contracts.  Guaranties  and
                 ----------------------------------------------------------
Warranties.  At  least  two (2) Business Days prior to the Closing, Seller shall
----------
deliver  to Buyer an Assignment of Construction Contracts in the form of Exhibit
                                                                         -------
"L" attached hereto  relating  to  all Construction Contracts and all work which
--
Seller has heretofore caused to be conducted on the Lots or within the Projects,
and  Seller  shall simultaneously provide Buyer with a Consent to Assignment (in
the  form  attached  to  Exhibit  "L")  executed  by  each and every contractor,
                         -----------
subcontractor,  materialman  and  supplier  which is a party to any Construction
Contract  (COLLECTIVELY,  THE  "ASSIGNMENT  OF  CONSTRUCTION  CONTRACTS").  The
                                ---------------------------------------
requirement  to  provide  Consents  to  the Assignment of Construction Contracts
shall  be deemed satisfied if Seller provides such consents from contractors and
materialmen  whose Construction Contracts represent ninety-five percent (95%) or
more  of  the costs to complete the construction for the Lots Under Construction
as  of  the  Closing  Date  as  determined  on  a  Project  by  Project  basis.

          6.1.9  Assignments  of  Plans. At least two (2) Business Days prior to
                 ----------------------
Closing,  Seller  shall  deliver to Buyer an Assignment of Plans with respect to
the Plans in the form of Exhibit "M" attached hereto executed by Seller together
                         ----------
with  a  Consent to Assignment (in the form attached to Exhibit "M") executed by
                                                        ----------
each and every preparer to such Plans (COLLECTIVELY, THE "ASSIGNMENT OF PLANS").
                                                          -------------------

          6.1.10 Assignment of Declarant's Rights. At the Closing, if and to the
                 --------------------------------
extent  Buyer  is  the holder of the Declarant's or Developer's rights under any
Declaration  of  Covenants,  Conditions  and  Restrictions  affecting any of the
Projects,  Seller  shall  execute  and  cause  to  be recorded, an Assignment of
Declarant's and/or Developer's Rights pursuant to which Seller shall assign such
Declarant's  and/or  Developer's  rights  to  Buyer.

          6.1.11  Assignment  of  Sales  Contracts. At the Closing, Seller shall
                  --------------------------------
execute  and  deliver  to  Buyer  two  (2)  originals  of an Assignment of Sales
Contracts  with  respect  to  each  Sales  Contract  in  the form of Exhibit "N"
                                                                     -----------
attached  hereto  (COLLECTIVELY,  THE  "ASSIGNMENT  OF  SALES  CONTRACTS").
                                        --------------------------------

          6.1.12 Non-Foreign Affidavits. At the Closing, Seller shall deliver to
                 ----------------------
Buyer  one  or  more non-foreign affidavits executed by Seller (THE "NON-FOREIGN
                                                                     -----------
AFFIDAVIT").
---------

     6.2  Failure  of  Buyer's  Closing  Conditions.  If  any of Buyer's Closing
          -----------------------------------------
Conditions  have  not  been  fulfilled within the applicable time periods, Buyer
may:

          6.2.1  Waive  the  Buyer's  Closing  Conditions  and  close  Escrow in
accordance  with this Agreement, without adjustment or abatement of the Purchase
Price;  or

          6.2.2  Elect  to  extend  the  Closing  Date (as defined below) to the
second  (2nd)  business  day following Seller's eventual satisfaction or Buyer's
eventual  waiver  of  the  Buyer's  Closing  Conditions;  or

          6.2.3  Terminate this Agreement by written notice to Seller and Escrow
Agent,  in which event the Deposit shall be returned to Buyer and all documents,
instruments  and funds delivered into Escrow shall be returned to the party that
delivered  the  same  into  Escrow,  and  to  the extent that the failure of any
applicable  Buyer's Closing Condition is caused by a Seller default, Buyer shall
be  entitled  to pursue its rights and remedies pursuant to the terms of Section
12  hereof.

          6.2.4 Notwithstanding any other provision contained herein, if Seller,
despite  its  good  faith  and  diligent  efforts,  is  unable  on or before the
specified  date  to  obtain  the  Consents it is required to provide in Sections
6.1.6,  6.1.8  and 6.1.9 above, then the Closing Date shall be extended by seven
(7)  calendar  days  to  allow Buyer the opportunity and right to seek to obtain
such  Consents itself. In the event Buyer is unable to obtain such Consents with
such  seven  (7)  calendar  day  period, Buyer must, within such period elect to
proceed  as  set  forth  in  Section 6.2.1 or 6.2.3 above, as the provisions set
forth  in  Section  6.2.2  shall not be applicable with respect to such Consents
provided  Seller  used  its  good  faith  and  diligent  efforts  to obtain such
Consents.  However,  if  neither  Seller  nor Buyer is able to obtain all of the
Consents  required under Section 6.1.9, then the Purchase Price shall be reduced
by  $100,000.

          6.3  Seller's Closing Conditions. The obligation of Seller to complete
               ---------------------------
the  transaction  contemplated  by  this  Agreement  is subject to the following
conditions  precedent  (and conditions concurrent, with respect to deliveries to
be  made  by  the  parties  at the Closing) (THE "SELLER'S CLOSING CONDITIONS"),
                                                  ---------------------------
which  conditions  may be waived, or the time for satisfaction thereof extended,
by  Seller  only  in  a  writing  executed  by  Seller:

          6.3.1  Buyer's  Due  Performance.  All  of  the  representations  and
                 -------------------------
warranties  of  Buyer  set  forth  in  this Agreement shall be true, correct and
complete in all material respects as of the Closing Date, and Buyer, on or prior
to  the  Closing  Date,  shall  have  complied  with and/or performed all of the
obligations,  covenants  and  agreements  required  on  the  part of Buyer to be
complied  with or performed at or prior to Closing pursuant to the terms of this
Agreement.

                                        8
<PAGE>
          6.3.2 Bankruptcy. No action or proceeding shall have been commenced by
                ----------
or  against  Buyer  under  the  federal bankruptcy code or any state law for the
relief  of  debtors  or  for  the  enforcement  of  the  rights  of  creditors.

          6.3.3  Deliveries.  Buyer  shall  have  delivered  to  Escrow Agent or
                 ----------
Seller,  as the case may be, such documents or instruments as are required to be
delivered  by  Buyer  pursuant  to  the  terms  of  this  Agreement.

          6.4  Failure  of  Seller's  Closing Conditions. If any of the Seller's
               -----------------------------------------
Closing  Conditions  have not been fulfilled within the applicable time periods,
Seller  may:

          6.4.1  Waive  the  Seller's  Closing  Condition  and  close  Escrow in
accordance  with this Agreement, without adjustment or abatement of the Purchase
Price;  or

          6.4.2  Terminate this Agreement by written notice to Seller and Escrow
Agent,  in  which  event  (a) the Deposit shall be returned to Buyer, (b) Escrow
Agent  shall  return  all  other documents, instruments and funds delivered into
Escrow  to  the  party  that  delivered the same into Escrow and (c) the parties
shall  have  no  further  rights,  remedies, obligations or liability under this
Agreement  except  such  matters which are specifically provided to survive such
cancellation.

7.  CLOSING.
    -------

     7.1  Closing Date. Subject to the provisions of this Agreement, the Closing
          ------------
shall  take  place  on June 7, 2000, or on such other date as the parties hereto
may  agree.  As  used  herein,  the  following  terms  shall  have the following
meanings:  (a)  the  "CLOSING"  shall  mean  the recordation of the Deeds in the
                      -------
official  records  of Pima County, Arizona (THE "OFFICIAL RECORDS"); and (b) the
                                                          -------
"CLOSING  DATE"  shall  mean  the  date  upon which the Closing actually occurs.
--------------

     7.2  Deliveries  by  Seller.  On or before the Closing Date, Seller, at its
          ----------------------
sole  cost  and  expense, shall deliver or cause to be delivered into Escrow the
following  documents  and  instruments,  each  dated  as of the Closing Date, in
addition  to  all  other  items  and  payments  required by this Agreement to be
delivered  by  Seller  at  the  Closing:

          7.2.1  Deeds.  Original  executed and acknowledged Deeds conveying the
Real  Property  to  Buyer;

          7.2.2  Non-Foreign  Affidavits.  Original  executed  Non-Foreign
                 -----------------------
Affidavits;

          7.2.3  Assignments  of  Model  Leases.  Two  (2)  original  executed
                 ------------------------------
counterparts  of  each  Assignment  of  Lease;

          7.2.4  Bills  of  Sale. Two (2) original executed counterparts of each
                 ---------------
Bill  of  Sale;

          7.2.5 Assignments of Construction Contracts. Two (2) original executed
                -------------------------------------
counterparts  of  the  Assignments  of  Construction Contracts together with the
original  Consents  to  be  attached  thereto.

          7.2.6  Assignments of Plans. Two (2) original executed counterparts of
                 --------------------
each  Assignment  of  Plans  for  each  of  the Plans together with the original
Consents  to  be  attached  thereto.

          7.2.7  Assignment  of  Declarant's  Rights.  The  original  executed
                 -----------------------------------
Assignment(s)  of  Declarant's  Rights.

          7.2.8  Assignments  of  Sales  Contracts.  Two  (2)  original executed
                 ---------------------------------
Assignments  of  Sales  Contracts.

          7.2.9  Consent of Lessors. The original Consent of Lessors executed by
                 ------------------
the  lessors  of the Model Leases, provided Buyer shall provide Seller with five
(5)  days  advance  notice  of  any  such  request.

          7.2.10  Sales  Contract  Notices.  If  requested  by Buyer, a separate
                  ------------------------
letter  to each of the Sold Lot Buyers, duly executed by Seller, dated as of the
Closing  Date  and  addressed  to  each  Sold Lot Buyer, informing such Sold Lot
Buyers  of  the assignment of the Sales Contracts to Buyer, provided Buyer shall
provide  Seller  with  five  (5)  days  advance  notice  of  any  such  request.

          7.2.11 Construction Contracts Notice. A separate letter to each of the
                 -----------------------------
parties to the Constructions Contracts, duly executed by Seller, dated as of the
Closing  Date  and  addressed  to each such party, informing such parties of the
assignment  of  the  Construction  Contracts  to  Buyer.

          7.2.12  Proof  of  Authority.  Such  proof  of  Seller's authority and
                  --------------------
authorization  to  enter  into  this  Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or  delivering any instruments, documents or certificates on behalf of Seller to
act  for and bind Seller as may be reasonably required by Escrow Agent or Buyer;
and

          7.2.13  Other.  Such  other  documents  and  instruments,  signed  and
                  -----
properly  acknowledged  by Seller, if appropriate, as may be reasonably required
by  Buyer,  Escrow  Agent  or otherwise in order to effectuate the provisions of
this  Agreement  and  the  Closing  of  the  transaction  contemplated  herein.

                                        9
<PAGE>
          Notwithstanding any other provision contained in this Agreement, Buyer
may  require  that  separate  closing documents be executed with respect to that
part  of  the Property located within each of the four (4) Projects. Buyer shall
notify  Seller  of  such  election  at  least two (2) Business Days prior to the
Closing  Date.

     7.3  Deliveries by Buyer. On or before the Closing Date, Buyer, at its sole
          -------------------
cost  and  expense,  shall  deliver  or  cause  to  be delivered into Escrow the
following  funds,  documents and instruments, each dated as of the Closing Date,
in  addition  to  all  other items and payments required by this Agreement to be
delivered  by  Buyer  at  the  Closing:

          7.3.1  Purchase  Price.  Cash  in  an  amount  equal to the sum of the
                 ---------------
Purchase  Price,  as adjusted, and all of the Buyer's Closing Costs and less the
amount  of  the  Deposit  (and  otherwise  sufficient  to  close the transaction
contemplated  herein);

          7.3.2  Assignments of Lease. Two (2) original executed counterparts of
                 --------------------
each  Assignment  of  Lease;

          7.3.3  Bills  of  Sale. Two (2) original executed counterparts of each
                 ---------------
Bill  of  Sale;

          7.3.4 Assignments of Declarant's Rights. A counterpart of the original
                ---------------------------------
of  each  Assignment  of  Declarant's  Rights.

          7.3.5  Proof  of  Authority.  Such  proof  of  Buyer's  authority  and
                 --------------------
authorization  to  enter  into  this  Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or  delivering  any instruments, documents or certificates on behalf of Buyer to
act  for and bind Buyer as may be reasonably required by Escrow Agent or Seller;
and

          7.3.6 Other. Such other documents and instruments, signed and properly
                ------
acknowledged  by Buyer, if appropriate, as may reasonably be required by Seller,
Escrow  Agent  or  otherwise  in  order  to  effectuate  the  provisions of this
Agreement  and  the  Closing  of  the  transaction  contemplated  herein.

          7.4 Actions by Escrow Agent. Provided that Escrow Agent shall not have
              -----------------------
received  written notice from Buyer or Seller of the failure of any condition to
the  Closing  or of the termination of the Escrow and this Agreement, when Buyer
and  Seller  have deposited into Escrow the documents and funds required by this
Agreement and Escrow Agent is irrevocably and unconditionally committed to issue
the  Owner's  Title  Policies  in accordance with the terms hereof, Escrow Agent
shall,  in  the  order  and  manner  herein  below indicated, take the following
actions:

          7.4.1  Funds.  Disburse  all  funds  as  follows:
                 -----

          7.4.1.1  Pursuant to the "Closing Statement" (as hereinafter defined),
retain  for  Escrow  Agent's  own account all escrow fees and costs, disburse to
Escrow  Agent  the fees and expenses incurred in connection with the issuance of
the  Owner's Title Policies and the Leasehold Policies and disburse to any other
persons  or  entities  entitled  thereto  the amount of any other Closing Costs;

          7.4.1.2 Disburse to Seller an amount equal to the Purchase Price, less
any  adjustments provided for in Sections 3.2 and 3.3 above and less $300,000 as
funds  to  be  deposited  into  the Holdback Account and less the prorations and
allocations  of  Closing  Costs  provided  for  herein;  and

          7.4.1.3  Disburse  to  the  party who deposited the same any remaining
funds  in  the  possession  of  Escrow Agent after payments pursuant to Sections
7.4.1.1  and  7.4.1.2  above  have  been  completed;

          7.4.2  Recording.  Cause  the Deeds and the Assignments of Declarant's
                 ---------
Rights  and  any other documents which the parties hereto may mutually direct to
be  recorded  in  the  Official  Records and obtain conformed copies thereof for
distribution  to  Buyer  and  Seller;

          7.4.3 Perfection of Security Interest. File all documents necessary to
                -------------------------------
perfect the security interest granted by Seller to Buyer pursuant to Section 3.3
of  this  Agreement;

          7.4.4  Delivery  of  Documents. Deliver: (a) to Seller (i) one copy of
                 -----------------------
all documents deposited into Escrow and (ii) one conformed copy of each document
recorded  pursuant to the terms hereof; and (b) to Buyer, (i) an original of all
documents  deposited  into  Escrow  (other  than  the  Deeds, the Assignments of
Declarant's  Rights  and  the  Non-Foreign  Affidavits),  (ii)  the  original
Non-Foreign  Affidavits  and  (iii) one conformed copy of each document recorded
pursuant  to  the  terms  hereof;  and

          7.4.5 Owner's Title Policies. Cause Escrow Agent to issue to Buyer the
                ----------------------
Owner's  Title  Policies  and  the  Leasehold  Policies.

          7.5  Prorations.
               ----------

                                       10
<PAGE>
          7.5.1 Taxes, homeowners' assessments, utility costs and other expenses
affecting  the  Property  shall  be  prorated between Buyer and Seller as of the
Closing  Date  based  on  a  365  day year; provided, however, any real property
assessments  and  improvement assessments of any kind affecting the Property and
any amounts owed to any homeowners' associations for the Projects shall, whether
or  not  then  due,  be  paid  in full by Seller at the Closing. For purposes of
calculating prorations, Buyer shall be deemed to be title holder of the Property
and,  therefore,  shall be responsible for the expenses incurred with respect to
the  Property for the periods after 12:01 a.m. Arizona Time on the Closing Date.
All  non-delinquent real estate taxes on the Property shall be prorated based on
the  actual  current  tax  bill.

          7.5.2  Two  (2)  Business Days prior to the Closing Date, Escrow Agent
shall deliver to each of the parties for their review and approval a preliminary
closing  statement  (THE "PRELIMINARY CLOSING STATEMENT") setting forth: (a) the
                         ------------------------------
proration  amounts  allocable  to  each  of  the parties pursuant to Section 7.5
hereof  and  (b)  the Closing Costs allocable to each of the parties pursuant to
Section 7.6 hereof. Based on each of the party's comments, if any, regarding the
Preliminary Closing Statement, Escrow Agent shall revise the Preliminary Closing
Statement  and deliver a final, signed version of a closing statement to each of
the  parties  at  the  Closing  (THE  "CLOSING  STATEMENT").
                                       ------------------

          7.6  Closing  Costs.  Each  party shall pay its own costs and expenses
               --------------
arising  in  connection with the Closing (including, without limitation, its own
attorneys'  and advisors' fees, charges and disbursements), except the following
costs  (THE  "CLOSING  COSTS"),  which shall be allocated between the parties as
              --------------
follows:

          7.6.1  Escrow  Agent's  escrow fees and costs, which shall be paid one
half  (1/2)  by  Seller  and  one-half  (1/2)  by  Buyer;

          7.6.2  The  cost  of  the  Owner's  Title  Policies  and the Leasehold
Policies to the extent attributable to standard coverage shall be paid by Seller
with  the  cost  of  the  Owner's  Title  Policies  and  the  Leasehold Policies
attributable  to  extended  coverage  to  be  paid  by  Buyer;

          7.6.3  The  cost of any endorsements to the Owner's Title Policies and
the  Leasehold  Policies,  which  shall  be  paid  by  Buyer;

          7.6.4 All other closing fees and costs shall be charged to the parties
in  accordance  with  Escrow  Agent's  customary  practices;  and

          7.6.5  All  recording  and filing fees, which shall be paid by Seller.

          7.7  Deliveries  Outside of Escrow. Seller shall deliver possession of
               -----------------------------
the  Property,  subject  only  to  the  Permitted  Exceptions, to Buyer upon the
Closing.  Further, Seller hereby covenants and agrees to deliver to Buyer, on or
prior  to  the  Closing,  the  following  items:

          7.7.1 Intangible Property. The Intangible Property, including, without
                -------------------
limitation,  the  original  Property  Documents;  and

          7.7.2  Personal  Property.  The  Personal Property, including, without
                 ------------------
limitation,  any  and  all  keys,  pass  cards, remote controls, security codes,
computer  software and other devices relating to access to the Improvements, the
Models  or  any  other  parts  of  the  Property.

8.  SELLER'S  REPRESENTATIONS  AND  WARRANTIES.
    ------------------------------------------

Seller  represents  and  warrants  to and agrees with Buyer, as of the Execution
Date  and  as  of  the  Closing  Date,  as  follows:

     8.1  Due  Organization. Seller is a corporation duly organized and existing
          -----------------
in  good  standing  under  the  laws  of  the  State  of  Arizona.

     8.2  Seller's  Authority:  Validity  of  Agreements. Seller has full right,
          ----------------------------------------------
power  and authority to sell the Property to Buyer as provided in this Agreement
and  to  carry  out  its obligations hereunder. The individual(s) executing this
Agreement  and  the  instruments  referenced herein on behalf of Seller have the
legal  power,  right and actual authority to bind Seller to the terms hereof and
thereof.  This Agreement is, and all other instruments, documents and agreements
to  be  executed and delivered by Seller in connection with this Agreement shall
be,  duly  authorized,  executed  and  delivered  by  Seller and shall be valid,
binding  and  enforceable  obligations  of  Seller (except as enforcement may be
limited  by  bankruptcy,  insolvency  or similar laws) and do not, and as of the
Closing Date will not, violate any provisions of any agreement or judicial order
to  which  Seller  is  a  party  or  to which Seller or the Property is subject.

     8.3  Model  Leases.  The  Model Leases are the only leases which affect the
          -------------
Property. No default or dispute exists under or with respect to any of the Model
Leases.  Exhibit "B" accurately describes the terms of each of the Model Leases.
         ----------

     8.4  Contracts.  Except for the Model Leases and except as set forth on the
          ---------
schedule  attached  hereto  as Exhibit "D", neither Seller nor any of its agents
                               -----------
has  executed  any  service,  maintenance,  repair,  management, supply or other
contracts  or  leases (excluding the Sales Contracts and Construction Contracts)
affecting  the  Property  or  the  Projects  which  would  be  binding  on Buyer
subsequent  to  the  Closing.

                                       11
<PAGE>
     8.5  Violations  of Laws. To "Seller's Knowledge" (as hereinafter defined),
          -------------------
Seller  has  not  received  any  written  notices of any violations of any laws,
ordinances,  orders  or  requirements  of  any governmental authority, agency or
officer  having  jurisdiction against or affecting any or all of the Property or
the  Projects,  which  have  not  previously  been  complied  with.

     8.6  Litigation.  To  Seller's  Knowledge,  (a)  there  are  no  actions,
          ----------
investigations,  suits  or  proceedings  (other  than  tax  appeals or protests)
pending  or  threatened that have a material adverse effect on any or all of the
Property  or  the  Projects,  or  the  ownership, development, operation or sale
thereof,  and (b) there are no judgments, orders, awards or decrees currently in
effect  against  Seller with respect to the ownership, development, operation or
sale  of  all  of  any  part of the Property or the Projects which have not been
fully  discharged  prior  to  the  Execution  Date.

     8.7  Zoning  and  Condemnation. To Seller's Knowledge, there are no pending
          -------------------------
proceedings to alter or restrict the zoning or other use restrictions applicable
to  all  or  any part of the Property or any part of the Projects, or to condemn
all or any portion of the Property or the Projects by eminent domain proceedings
or  otherwise.

     8.8  Ownership  of  Property.  Seller  owns  and  has  the right, power and
          -----------------------
authority  to  convey  the  Property to Buyer as contemplated by this Agreement.

     8.9  Possession/Lease.  To  Seller's  Knowledge,  there  are  no parties in
          ----------------
adverse  possession  of  the Property; there are no parties in possession of the
Lots  or  the  Property  except  Seller  and  except the lessors under the Model
Leases;  and  no  party  has  been  granted  any  license, lease, or other right
relating to the use or possession of any part of the Property except the lessors
under  the  Model  Leases.

     8.10  Creditors  Issues.  To  Seller's Knowledge, there are no attachments,
           -----------------
executions,  assignments  for  the  benefit  of  creditors,  receiverships,
conservatorships,  or  voluntary  or  involuntary  proceedings  in bankruptcy or
pursuant to any other laws for relief of debtors contemplated or filed by Seller
or  pending  against  Seller  or  affecting  or involving all or any part of the
Property.

     8.11  Other  Contracts.  There  are  no  contracts  or  other  obligations
           ----------------
outstanding  for  the  sale,  exchange, leasing or transfer of all or any of the
Property.

     8.12  Archaeological  Issues.  To Seller's Knowledge, there are no sites of
           ----------------------
historical  or  archaeological  importance  within  the  Projects.

     8.13  Protected  Species/Habitat.  Seller  has  no  actual knowledge of the
           --------------------------
existence  within  the  Projects  of  any  plant,  animal or bird or any habitat
associated with any species of plant, animal or bird that is protected under any
federal,  state  or  local  law  or ordinance or which could otherwise impede or
delay  Buyer's  intended  development  and  sale  of  any  of  the  Lots.

     8.14  Assessment  Liens.  To  Seller's  Knowledge,  there is no improvement
           -----------------
district (either in existence or planned) which includes the Lots, and there are
no  assessment  liens  against  all  or  any  part  of  the  Property.

     8.15 Environmental. To Seller's Knowledge, there is not now and there never
          -------------
has  been  a  release  or  threatened  release  or  disposal of any Pollutant or
Hazardous  Substance  (as  those  terms  are  used and defined in any applicable
federal,  state  or  local law, ordinance or regulatory agency mandate regarding
human  health  and/or  environmental  conditions ("Environmental Law") in, on or
under  the Lots or any other part of the Projects so as to result in a violation
or potential violation of any Environmental Law. Neither Seller nor, to Seller's
Knowledge, any other person or entity has used in any manner, stored, generated,
released or disposed of any Pollutant or Hazardous Substance in, on or under the
Lots  or  any  other  part  of  the Projects. To Seller's Knowledge, there is no
current or threatened legal or administrative proceeding or investigation by any
governmental  authority or any other third party with respect to the presence of
any  Pollutant or Hazardous Substance in, on or under the Lots or any other part
of the Projects or the migration of a Pollutant or Hazardous Substance in, on or
under  or  from  the  Lots  or  any  other  part  of  the  Projects.

     8.16 Storage Tanks. To Seller's Knowledge, there are no underground storage
          -------------
tanks  located  on  or  under any of the Lots or any other part of the Projects.

     8.17  Access. Each of the Lots has legal access to and from a public street
           ------
over  paved  roadways.

     8.18  Utilities.  All  water,  electric,  gas,  sewer,  telephone,  cable
           ---------
television  and  other utilities for each of the Lots are fully installed to the
lot  lines  for  each  of  the Lots, and all such facilities are in good working
condition, and Seller is not aware of any defects or deficiencies regarding such
facilities.

     8.19  Drainage/Grading.  To  Seller's  Knowledge,  there are no drainage or
           ----------------
grading  problems  on  any  Lots  or  within  the  Projects.

     8.20  Sales Contracts. The Sales Contracts are in full force and effect and
           ---------------
no  defaults  exist under the Sales Contracts and no conditions or circumstances
exist  which  could,  with  the  passage  of  time  or  the providing of notice,
constitute  a  default under the Sales Contracts nor, to Seller's knowledge, has
Seller  received  any  written  notice  or demand from any Sold Lot Buyer or any
agent  of  any  Sold  Lot Buyer indicating a Sold Lot Buyer's desire to cancel a
Sales  Contract  or a Sold Lot Buyer's unhappiness with the home or improvements
being  constructed  pursuant to the Sales Contract except for those delivered to
by  Seller  to  Buyer  during  the  Due  Diligence  Period.  In the event Seller

                                       12
<PAGE>
hereafter  receives  any  such  notices  during the course of the Escrow, Seller
shall  immediately provide such notice(s) to Buyer and such shall not constitute
a default under this Agreement. Furthermore, to Seller's knowledge, there are no
facts,  circumstances  or  conditions  which  could adversely affect any party's
ability  to  fully  or timely perform its obligations under the Sales Contracts.
During  the  course  of  the Escrow, Seller shall not, without the prior written
approval  of Buyer, enter into any addendum or modifications to any of the Sales
Contracts to the extent (a) such addendum or modification is not in the ordinary
course  of  Seller's business and/or (b) the effect of such proposed addendum or
modification, alone or in the aggregate, is to decrease the purchase price for a
Sold  Lot  by  more  than  two  percent (2%) of the sales price set forth in the
applicable  Sales Contract. Furthermore, during the course of the Escrow, Seller
shall  not  enter  into  any new Sales Contracts relating to the Lots unless (a)
such  Sales  Contracts  are  on  terms and conditions no less favorable than the
existing  Sales Contracts and (b) the sales price for such Lot and the price for
any  options  and  the  lot  premium for such Lot are not less than ninety-eight
percent  (98%)  of  Seller's published prices for such items as of the Execution
Date.

     8.21  Construction Defects. To Seller's Knowledge, (a) there are no defects
           --------------------
or deficiencies in any of the improvements heretofore constructed by Seller with
respect  to  the  Property  or  the  Projects  nor  are  there  any  defects  or
deficiencies  in  any  of  the  Intangible  Property.

     8.22  Construction  Contracts.  Except  for  any  failure by Seller to have
           -----------------------
previously  paid  amounts  properly  payable  to  subcontractors  (all  of which
indebtedness will be resolved and paid by Seller prior to Closing), there are no
defaults  under  the  Construction  Contracts  nor  are  there  any  facts  or
circumstances  which could, with the passage of time or the providing of notice,
constitute a default under the Construction Contracts, and there are no existing
disputes  between  Seller  and  any  parties  with  respect  to the Construction
Contracts. In addition, to Seller's Knowledge, there are no facts, circumstances
or conditions which would adversely affect the ability of subcontractor to fully
and  timely  perform  its  obligations  under  the  Construction  Contracts.

     8.23 Comprehensive Sale. The Property constitutes all of Seller's remaining
          ------------------
right,  title  and  interest  within  the  Projects.

     8.24 Associations. Each of the homeowners' associations for the Projects is
          ------------
an  Arizona  non-profit corporation in good standing and, to Seller's Knowledge,
there  are  no  disputes between the Associations and Seller with respect to any
matters  related  to  any of the Projects or such Associations. In addition, the
Associations  are  adequately funded to handle Association affairs and a reserve
account  has  been  established  and funded in accordance with the reserve study
which  has heretofore been prepared by independent third-parties for each of the
Projects. Also, all common area tracts within the Projects have been conveyed to
and  are owned by the respective owners' associations for the Projects, free and
clear  of  liens.

     8.25  Declarant's  Rights.  Seller  does  not  own  and  has not previously
           -------------------
assigned  to  any  third-party  any  Declarant's  rights  relating to any of the
Projects.

     8.26  Lot  Premiums. The Purchase Price Summary accurately reflects the lot
           -------------
premiums  to  be  paid by each Sold Lot Buyer, and no third-party is entitled to
share  in  any  of  the  lot  premiums  paid  by  any  Sold  Lot  Buyer.

     8.27  Sold  Lot Buyer Deposits. All earnest money deposits paid by Sold Lot
           ------------------------
Buyers  pursuant  to the Sales Contracts are held by the escrows agents for each
of  the Sales Contracts with the exception of the deposits identified on Exhibit
                                                                         -------
"O"  to  this  Agreement,  which  were  paid  directly by the Sold Lot Buyers to
--
Seller,  and  Buyer  shall be entitled to a credit against the Purchase Price in
the  total  amount  of  the  deposits  paid to or held by Seller under the Sales
Contracts  as of the Closing Date. Prior to the Closing, Seller shall cause each
of  the escrow agents under the Sales Contracts to provide Buyer with an Consent
of  Lessors confirming the total of the earnest money held by such escrow agents
under  the  Sales Contracts and further confirming such escrow agents' agreement
to  release  such  monies  to Buyer upon the closings under the Sales Contracts.

     8.28 Construction Costs. Seller represents, warrants and covenants to Buyer
          ------------------
that  Seller  will,  at  or  prior to the Closing, pay all fees, costs, charges,
wages  and all other amounts due with respect to all services and work performed
and  materials  and  supplies  provided to or with respect to the Property on or
before May 25, 2000, and Seller hereby agrees to defend and defend Buyer and its
affiliates  and  hold Buyer and its affiliates harmless from any and all claims,
demands,  actions  and proceedings of any kind and any damages, losses, and fees
(including,  without limitation, attorneys' fees) which may at any time arise or
be incurred in connection with or relating to any services or work performed and
materials  and supplies provided to or with respect to the Property on or before
May  25,  2000.  Seller  shall  not,  during the course of the Escrow, incur any
construction  or  material costs which are not budgeted and accounted for in the
Purchase  Price  Summary  or  which  are  not incurred in connection with change
orders hereafter made and options hereafter selected subject to the restrictions
contained  herein  unless Seller notifies Buyer and Escrow Agent of such amounts
and  unless  Seller  is irrevocably committed to pay such amounts at or prior to
the  Closing.

     8.29  Seller's  Knowledge.  As  used  herein, the term "SELLER'S KNOWLEDGE"
           -------------------                               ------------------
shall  mean  the  actual  knowledge,  without  any  additional  investigation or
inquiry,  of  Eugene  L.  Baker  and  Christopher  Ellis.

                                       13
<PAGE>
     8.30  Survival.  All  of  the representations, warranties and agreements of
           --------
Seller  set forth in this Agreement shall be true upon the Execution Date, shall
be  deemed to be repeated at and as of the Closing Date (except as otherwise set
forth  in writing to Buyer) and shall survive for a period equal to one (1) year
from  the  Closing  Date.

9.  BUYER'S  REPRESENTATIONS  AND  WARRANTIES.
    -----------------------------------------

Buyer  represents and warrants to Seller, as of the Execution Date and as of the
Closing  Date,  as  follows:

     9.1  Due Organization. Buyer is a limited liability company duly organized,
          ----------------
validly  existing  and  in  good standing under the laws of the State of Nevada.

     9.2  Buyer's Authority; Validity of Agreements. Buyer has full right, power
          -----------------------------------------
and  authority  to  purchase and acquire the Property from Seller as provided in
this  Agreement  and  to  carry out its obligations hereunder. The individual(s)
executing  this  Agreement  and  the  instruments referenced herein on behalf of
Buyer  have  the  legal  power,  right and actual authority to bind Buyer to the
terms  hereof and thereof. This Agreement is, and all instruments, documents and
agreements  to  be  executed  and  delivered  by  Buyer  in connection with this
Agreement  shall  be, duly authorized, executed and delivered by Buyer and shall
be  valid,  binding  and enforceable obligations of Buyer (except as enforcement
may  be limited by bankruptcy, insolvency or similar laws) and do not, and as of
the  Closing  Date  will not, violate any provision of any agreement or judicial
order  to  which  Buyer  is  a  party  or  to  which  Buyer  is  subject.

     9.3  Survival.  All  of  the  representations, warranties and agreements of
          --------
Buyer  set  forth in this Agreement shall be true upon the Execution Date, shall
be  deemed to be repeated at and as of the Closing Date (except as otherwise set
forth in writing to Seller) and shall survive for a period equal to one (1) year
from  the  Closing  Date.

10.  ADDITIONAL  COVENANTS  AND  AGREEMENTS.
     --------------------------------------

     10.1  "As-Is"  Purchase.  Subject  to  the  representations, warranties and
           -----------------
covenants  of  Seller  contained  in  this  Agreement  and  the other provisions
contained  in this Agreement, all Property purchased by Buyer shall be purchased
strictly  in  "AS  IS" condition, and Buyer accepts and agrees to bear all risks
regarding  all  attributes  and conditions, latent or otherwise, of the Property
purchased  by Buyer, except to the extent that Seller has caused, contributed to
or  exacerbated  any  such  risks or defects. Buyer has made or will, during the
Feasibility  Period,  make its own inspection and investigation of the Property,
including,  without  limitation,  their  subsurface, soil, engineering and other
conditions  and  requirements,  whether  there  are  any eminent domain or other
public  or quasi-public takings of the Property contemplated, and all zoning and
regulatory  matters  pertinent  to  the  Property,  as  Buyer deems necessary or
prudent.  Subject  to the representations, warranties, covenants and adjustments
provided  for  herein,  Buyer shall purchase the Property based upon Buyer's own
inspection  and  investigation  and  not  in  reliance  on  any  statement,
representation,  inducement  or agreement of Seller except as expressly provided
herein.  Buyer  agrees  that,  except  as  expressly provided in this Agreement,
neither  Seller  nor  anyone  acting  on  behalf  of  Seller  has  made  any
representation,  guarantee  or  warranty  whatsoever,  either  written  or oral,
concerning  the  Property.

     10.2 Damage Caused by Seller. Notwithstanding Section 10.1 above, if Seller
          -----------------------
at  any  time enters onto the Property or any other part of the Projects, and in
connection  with such entry causes, contributes to or exacerbates any defects or
risks  concerning  the Projects, then Seller shall be responsible for, and shall
indemnify,  defend  and  hold  harmless  Buyer  and  its  respective affiliates,
officers,  directors,  employees, and shareholders from and against all actions,
claims, demands, causes or action, loss, liability or expense (including without
limitation,  attorneys' fees and costs of litigation) arising from or in any way
connected  with  such  actions  of  Seller.

11.  RISK  OF  LOSS.
     --------------

     11.1  Condemnation.  If,  prior  to  the Closing, all or any portion of the
           ------------
Property  is  taken  by  condemnation  or eminent domain (or is the subject of a
pending  or  contemplated  taking  which has not been consummated), Seller shall
immediately  notify  Buyer  of  such  fact.  In such event, Buyer shall have the
option to terminate this Agreement upon written notice to Seller given not later
than  five  (5)  days  after  receipt  of  such  notice  from  Seller. Upon such
termination, the Deposit shall be returned to Buyer and neither party shall have
any further rights or obligations hereunder other than pursuant to any provision
hereof which expressly survives such termination. If Buyer does not elect or has
no  right  to  terminate  this  Agreement,  Seller shall assign and turn over to
Buyer,  and  Buyer  shall  be  entitled  to receive and keep, all awards for the
taking  by  condemnation and Buyer shall be deemed to have accepted the Property
subject  to  the  taking  without  reduction  in  the  Purchase  Price.

     11.2  Casualty.  Prior  to  the Closing and notwithstanding the pendency of
           --------
this  Agreement,  the  entire  risk  of loss or damage by earthquake, hurricane,
tornado,  flood, landslide, fire or other casualty shall be borne and assumed by
Seller.  If,  prior  to  the  Closing,  any  damage occurs to any portion of the
Property  as  a  result of any earthquake, hurricane, tornado, flood, landslide,
fire  or  other casualty, Seller shall immediately notify Buyer of such fact. In
such event, Buyer shall have the option to terminate this Agreement upon written
notice  to  Seller  given not later than five (5) days after receipt of any such
notice  from  Seller.  Upon  such  termination, the Deposit shall be returned to
Buyer  and  neither party shall have any further rights or obligations hereunder
other  than  pursuant  to  any  provision  hereof  which expressly survives such
termination.  If  Buyer  does  not  elect  or  has  no  right  to terminate this
Agreement,  Seller  shall  assign  and turn over, and Buyer shall be entitled to
receive  and keep, all insurance proceeds payable with respect to such damage or
destruction (which shall then be repaired or not at Buyer's option and cost) and
the  parties  shall  proceed to the Closing pursuant to the terms hereof without
modification  of  the terms of this Agreement. If Buyer does not elect or has no
right  to  terminate  this Agreement by reason of any casualty, Buyer shall have
the  right  to  participate  in  any  adjustment  of  the  insurance  claim.

                                       14
<PAGE>
12.  REMEDIES.
     --------

     If,  prior to Closing, Seller breaches or defaults on its obligations under
this  Agreement  and if such breach or default is not cured within five (5) days
after  the  date  Buyer  provides  Seller with notice of such breach or default,
Buyer  may  elect  to  either  (a)  terminate this Agreement, in which event the
Deposit  shall  be  returned  Buyer  and Seller shall reimburse Buyer for all of
Buyer's  reasonable  out-of-pocket  expenses  (including,  without  limitation,
reasonable  attorneys'  fees,  charges and disbursements) incurred in connection
with  this Agreement or (b) proceed with whatever steps Buyer may deem necessary
to specifically enforce the performance of this Agreement. If, prior to Closing,
Buyer  breaches  or defaults on its obligations under this Agreement and if such
breach  or  default  is  not  cured  within  five (5) days after the date Seller
provides  Buyer  with  notice of such breach or default, Seller may, as its sole
remedy,  elect  to terminate this Agreement, in which event the Deposit shall be
paid to Seller as liquidated damages and not as a penalty, it being acknowledged
that  the  amount  of damages Seller would suffer as a result of such default by
Buyer  would  be  difficult  to  ascertain  and  that  the Deposit constitutes a
reasonable  estimate of such damages. In the event a breach or default occurs or
is first discovered after the Closing and if such breach or default is not cured
within  five (5) days after the non-breaching party provides the breaching party
with  notice  of  such breach or default, the non-breaching party shall have the
right  to  proceed with all actions available at law or in equity to enforce the
performance  of  this  Agreement and recover any damages suffered or incurred by
the  non-breaching  party  as  a  result  of  such  breach or default. If Seller
breaches or defaults on its obligations under this Agreement and Buyer elects to
terminate  this  Agreement as a result thereof, the Deposit shall immediately be
returned  to  Buyer.

13.  BROKERS'  COMMISSION.
     --------------------

     Each  party  represents  and warrants to the other that it has not employed
any  broker  or  finder in connection with the transactions contemplated by this
Agreement.  Each party shall indemnify, defend and hold harmless the other party
from  all  liability  and  expense,  including,  without  limitation, reasonable
attorneys'  fees,  arising  from  any  claim  by any broker, agent or finder for
commissions,  finder's fees or similar charges because of any act of such party.
Each  party  acknowledges  that  the  other  party  and/or  its  principals  and
affiliates  may be or may be affiliated with licensed real estate brokers and/or
salespersons  in  the  State  of  Arizona.

14.  INTERSTATE  LAND  SALES  FULL  DISCLOSURE  ACT.
     ----------------------------------------------

     Seller  and Buyer believe and intend that the sales provided for herein are
exempt  from state subdivided land sales laws and the Interstate Land Sales Full
Disclosure Act by reason of being within one or more of the exemptions set forth
therein  or  in the regulations promulgated pursuant thereto. In support of such
exemption,  Buyer  represents  and  warrants  to  Seller  as  follows,  which
representation  and  warranty  shall be true and correct at all times during the
term  of  this  Agreement  and  shall survive the term of this Agreement without
limitation:  Buyer  is  regularly  engaged  in  the  business  of  constructing
residential, commercial or industrial buildings and/or reselling or leasing lots
to  persons  engaged  in  such  business,  is acquiring the Lots in the ordinary
course  of  that  business  and  otherwise meets the exemption prerequisites set
forth  in  15 U.S.C. Section 1702(a) (7) and further defined in 24 CFR 1710.5(g)
and  24  CFR  1710,  Appendix A. Buyer shall indemnify, defend and hold harmless
Seller  for,  from  and  against  any  and  all  claims,  demands,  liabilities,
obligations,  costs and expenses (including, without limitation, attorneys' fees
and  costs)  incurred  as  a  result  of  any misrepresentation by Buyer in this
Section.

15.  SALES  TAX.
     ----------

     Except  as  allocated to Buyer in the next sentence of this Section, Seller
shall  be fully responsible for all sales taxes, transaction privilege taxes and
other  taxes  relating to all improvements made to the Property and the Projects
on or before the Closing, and Seller hereby agrees to indemnify, defend and hold
Buyer  harmless  from  any and all claims, demands and liability related to such
taxes.  Buyer  shall  be  solely  responsible  for  all sales taxes, transaction
privilege  taxes  and  other taxes relating to actual costs incurred and paid in
connection  with the construction of homes on the Lots (as opposed to offsite or
project  improvements),  and  Buyer  agrees to indemnify, defend and hold Seller
harmless  from  any and all claims, demands and liability related to such taxes.

16.  MISCELLANEOUS  PROVISIONS.
     -------------------------

     16.1  Governing  Law.  This  Agreement  and the legal relations between the
           --------------
parties  hereto  shall  be  governed by and construed and enforced in accordance
with  the  laws  of  the  State  of  Arizona without regard to its principles of
conflicts  of  law.

     16.2  Entire  Agreement.  This  Agreement,  including the exhibits attached
           -----------------
hereto,  constitutes the entire agreement between Buyer and Seller pertaining to
the  subject  matter hereof and supersedes all prior agreements, understandings,
letters of intent, negotiations and discussions, whether oral or written, of the
parties,  and  there  are  no  warranties,  representations or other agreements,
express  or  implied, made to either party by the other party in connection with
the  subject  matter  hereof  except  as specifically set forth herein or in the
documents  delivered  pursuant  hereto  or  in  connection  herewith.

                                       15
<PAGE>
     16.3  Modification;  Waiver.  No  supplement,  modification,  waiver  or
           ---------------------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall be
deemed  or  shall  constitute a waiver of any other provision hereof (whether or
not  similar),  nor  shall  such  waiver  constitute  a continuing waiver unless
otherwise  expressly  provided.

     16.4  Notices.  All  notices, consents, requests, reports, demands or other
           -------
communications  hereunder  (COLLECTIVELY, "NOTICES") shall be in writing and may
be  given personally, by registered or certified mail, by telecopy or by Federal
Express  (or  other  reputable  overnight  delivery  service)  as  follows:

To  Seller  at:                     Diamond  Key  Homes,  Inc.
                                    2111  E.  Highland  Avenue,  Suite  440
                                    Phoenix,  AZ  85016
                                    Attention:  Eugene  L.  Baker,  President
                                    Phone:  602-840-8000
                                    Fax:  602-912-9400

To  Buyer  at:                      Nevada  Diversified  Equity,  LLC
                                    2525  E.  Camelback  Road,  Suite  765
                                    Phoenix,  AZ  85016
                                    Attention:  John  W.  Pacheco
                                    Phone:  602-381-6660
                                    Fax:  602-381-6661

With  copy  to:                     C.  Timothy  White,  Esq.
                                    Tiffany  &  Bosco,  P.A.
                                    1850  North  Central  Avenue,  Suite  500
                                    Phoenix,  AZ  85004-4546
                                    Phone:  602-255-6003
                                    Fax:  602-255-0103

To  Escrow  Agent  at:              Title  Guaranty  Agency  of  Arizona,  Inc.
                                    101  N.  Wilmot  Road
                                    P.0.  Box  16860
                                    Tucson,  AZ  85732-6860
                                    Attention:
                                    Phone:  520-750-8100
                                    Fax:  520-750-8112

or  to such other address or such other person as the addressee party shall have
last  designated  by  notice  to the other party. All Notices shall be deemed to
have  been  given when received. All Notices given by telecopy shall be followed
by  the  delivery of a hard copy of such Notice, provided that such Notice shall
be  deemed  to  have  been  given  when  received  by  telecopy.

     16.5 Expenses. Subject to the provision for payment of the Closing Costs in
          --------
accordance  with the terms of Section 7.6 hereof and any other provision of this
Agreement,  whether  or not the transaction contemplated by this Agreement shall
be consummated, all fees and expenses incurred by any party hereto in connection
with  this  Agreement  shall  be  borne  by  such  party.

     16.6 Severability. Any provision or part of this Agreement which is invalid
          ------------
or  unenforceable  in  any  situation  in  any  jurisdiction  shall,  as to such
situation  and  such  jurisdiction,  be  ineffective  only to the extent of such
invalidity  and  shall not affect the enforceability of the remaining provisions
hereof  or  the  validity  or  enforceability of any such provision in any other
situation  or  in  any  other  jurisdiction.

     16.7  Assignment;  Successors  and Assigns; Third Parties. Seller shall not
           ---------------------------------------------------
sell,  mortgage  or  otherwise encumber (except in the normal course of Seller's
business)  Seller's  interest  in the Property prior to or after Closing. Seller
shall  have  no  right  to  assign  its rights under this Agreement to any party
without Buyer's consent, which consent shall not be unreasonably withheld. Buyer
shall,  without  the consent of Seller, have the right to assign its interest in
this  Agreement  to any entity or group owned, controlled, managed or affiliated
with Buyer, its principals, their partners, members, associates or those related
or affiliated directly or indirectly with Meritage Corporation or its affiliates
or  principals. All of the rights, duties, benefits, liabilities and obligations
of  the  parties  shall  inure  to  the  benefit  of, and be binding upon, their
respective  successors and assigns. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to  confer  upon  or give to any person or entity, other than the parties hereto
and  their  successors  or permitted assigns, any rights or remedies under or by
reason  of  this  Agreement.

     16.8  Counterparts.  This Agreement may be executed in as many counterparts
           ------------
as  may  be deemed necessary and convenient, and by the different parties hereto
on  separate  counterparts,  each of which, when so executed, shall be deemed an
original,  but  all  such  counterparts  shall  constitute  one  and  the  same
instrument.

     16.9  Headings.  The Section headings of this Agreement are for convenience
           --------
of reference only and shall not be deemed to modify, explain, restrict, alter or
affect  the  meaning  or  interpretation  of  any  provision  hereof.

                                       16
<PAGE>
     16.10  Time  of  Essence.  Time shall be of the essence with respect to all
            -----------------
matters  contemplated  by  this  Agreement.

     16.11  Further  Assurances.  In  addition to the actions recited herein and
            -------------------
contemplated  to  be  performed, executed, and/or delivered by Seller and Buyer,
Seller  and  Buyer  agree  to  perform,  execute  and/or  deliver or cause to be
performed, executed and/or delivered at the Closing or after the Closing any and
all  such  further  acts, instruments, deeds and assurances as may be reasonably
required  to  consummate  the  transaction  contemplated  hereby.

     16.12  Number  and  Gender.  Whenever the singular number is used, and when
            -------------------
required  by the context, the same includes the plural, and the masculine gender
includes  the  feminine  and  neuter  genders.

     16.13  Construction.  This  Agreement  shall not be construed more strictly
            ------------
against one party hereto than against any other party hereto merely by virtue of
the  fact  that  it  may  have  been prepared by counsel for one of the parties.

     16.14  Exhibits.  All  exhibits  attached hereto are hereby incorporated by
            --------
reference  as  though  set  out  in  full  herein.

     16.15  Attorneys'  Fees.  In  the  event that either party hereto brings an
            ----------------
action  or proceeding against the other party to enforce or interpret any of the
covenants,  conditions,  agreements  or  provisions  of  this  Agreement,  the
prevailing  party  in such action or proceeding shall be entitled to recover all
costs  and expenses of such action or proceeding, including, without limitation,
attorneys'  fees,  charges,  disbursements  and  the  fees  and  costs of expert
witnesses.

     16.16  Business  Days. As used herein, the term "BUSINESS DAY" shall mean a
            --------------                            ------------
day  that is not a Saturday, Sunday or legal holiday. In the event that the date
for  the  performance  of  any covenant or obligation under this Agreement shall
fall  on  a  Saturday, Sunday or legal holiday, the date for performance thereof
shall  be  extended  to  the  next  Business  Day.

     16.17  Termination. In the event that this Agreement is terminated pursuant
            -----------
to the terms hereof, this Agreement and all of the provisions hereof shall be of
no  further  force  or effect and neither party shall have any further rights or
obligations  hereunder  other  than  pursuant to any provision contained in this
Agreement which expressly survives such termination. Buyer and Seller shall each
pay  its  own  fees  and  expenses  incident to the negotiation, preparation and
execution  of  this  Agreement  and  the  obtaining  of  the necessary approvals
thereof,  including  fees  and  expenses  of  its counsel, accountants and other
experts.  In addition, Seller and Buyer (and their representatives) shall return
to  the  other all copies of books, records, documents and other papers given by
Seller  or  Buyer  (or  their  representatives)  to  the  other  (or  their
representatives); provided, however, that nothing contained herein shall relieve
                  -----------------
any  party  hereto  from  liability  for any knowing breach or inaccuracy of any
representation  or  warranty  contained  herein or any failure to comply with or
satisfy  any  covenant  or  agreement contained herein. Notwithstanding anything
herein  to  the  contrary, the obligations of the parties under Section 17 below
                                                                ----------
shall  survive  any  abandonment  or  termination  of  this  Agreement.

17.  NON-DISCLOSURE/CONFIDENTIALITY.
     ------------------------------

     From  and  after  the  date  of this Agreement until the Closing, or in the
event  that  the  Closing  shall  not  occur,  then  thereafter, Buyer shall not
disclose to any third-party (other than to its directors, officers and employees
having  a  need  to  know  such  information  in connection with the transaction
contemplated  hereby,  or  to its attorneys, accountants, consultants, investors
and  lenders),  or  use  for  any  purpose  other  than  as contemplated by this
Agreement,  any  proprietary or confidential information regarding the Seller or
Saxton  Incorporated.  Buyer  agrees  not  to  disseminate  any  proprietary  or
confidential  information  regarding the Seller or Saxton Incorporated to others
except  as  hereinabove described, nor to use or permit to be used through their
agents,  employees  or  others on behalf of Buyer to damage the Seller or Saxton
Incorporated.  The  preceding  two  (2) sentences shall not apply to information
that  (i)  is,  was or becomes generally known or available to the public or the
industry  other  than  as a result of a disclosure by Buyer in violation of this
Agreement; (ii) was previously known by Buyer; (iii) is subsequently obtained by
Buyer  from  an  independent  third  party  source  having  no  obligation  of
confidentiality  to  Seller  or  Saxton  Incorporated; or (iv) is required to be
disclosed  by  law.  Buyer  shall  advise  Seller,  in  writing, of any request,
including a subpoena or similar legal inquiry, to disclose any such confidential
information,  such  that  Seller  can  seek  appropriate  legal  relief.

18.  PUBLIC  ANNOUNCEMENTS.
     ---------------------

     Buyer  and  Seller  shall  consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
and  shall  not  issue  any such press release or make any such public statement
prior  to  such  consultation, except as may be required by law on the advice of
counsel.

                                       17
<PAGE>
IN  WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of the
day  and  year  first
above  written.

BUYER:                              NEVADA  DIVERSIFIED  EQUITY,  LLC,
                                    a  Nevada  limited  liability  company

                                    By:  DIVERSIFIED  EQUITY  FINANCIAL  CORP.,
                                         a  Delaware  corporation

                                    By
                                       -----------------------------------------
                                            John  W.  Pacheco,  President

SELLER:                             DIAMOND  KEY  HOMES,  INC,
                                    an  Arizona  corporation

                                    By
                                       -----------------------------------------
                                            James  C.  Saxton,  CEO

                                    By
                                       -----------------------------------------
                                            Eugene  L.  Baker,  President

ESCROW  AGENT:

The  undersigned  Escrow  Agent  hereby  accepts the foregoing Purchase and Sale
Agreement  and Joint Escrow Instructions and agrees to act as Escrow Agent under
this  Agreement  in  strict  accordance  with  its  terms.

                                    TITLE  GUARANTY  AGENCY  OF  ARIZONA,  INC.

                                    By
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                                    Date:  May ____, 2000

                                       18
<PAGE>
                               AGREEMENT BY SAXTON

     Saxton  Incorporated  ("SAXTON")hereby  acknowledges and agrees that Nevada
                           ----------
Diversified  Equity,  LLC  and/or  its  assignee  ("BUYER") is entering into the
Purchase  and  Sale  Agreement  and  Joint  Escrow  Instructions  to  which this
Agreement is attached (THE "PURCHASE AGREEMENT") in reliance upon the reputation
                            ------------------
and  financial  strength  of  Saxton  as  a principal in Diamond Key Homes, Inc.
("SELLER").  Accordingly,  Saxton  hereby  agrees  to  be  jointly and severally
responsible  for  all obligations of Seller under the Purchase Agreement, and in
the  event Seller fails to fully and timely perform any of its obligations under
the  Purchase Agreement, Saxton shall, immediately upon the request of or demand
by  Buyer,  fully  perform  any  and  all  such  obligations.

                                    SAXTON  INCORPORATED,
                                    a  Nevada  corporation

                                    By
                                       -----------------------------------------

                                    Its
                                       -----------------------------------------

                                       19
<PAGE>

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