ITEM 3. LEGAL PROCEEDINGS.

On February 28, and March 1, 2007, two identical complaints were filed in the 17 ^th Judicial Circuit in and for Broward County, Florida against the Company, Levitt Corporation (“Levitt”) and the members of Levitt’s Board of Directors in (i) Samuel Flamholz, on behalf of himself and all others similarly situated, v. James Blosser, Darwin Dornbush, Alan B. Levan, William Scherer, S. Lawrence Kahn, III, Joel Levy, John E. Abdo, William Nicholson, Alan J. Levy, Levitt Corporation, and BFC Financial Corp. and (ii) Elaine Mount, on behalf of herself and all others similarly situated, v. James Blosser, Darwin Dornbush, Alan B. Levan, William Scherer, S. Lawrence Kahn, III, Joel Levy, John E. Abdo, William Nicholson, Alan J. Levy, Levitt Corporation, and BFC Financial Corp. , respectively. Each complaint relates to the previously reported definitive merger agreement entered into by the Company and Levitt, pursuant to which Levitt would, if the merger is consummated, become a wholly-owned subsidiary of the Company. The complaints allege that the members of Levitt’s Board of Directors breached their fiduciary duty to Levitt’s minority shareholders by approving the merger agreement with the Company. The plaintiffs apparently are incorrectly suggesting that the Company controls the outcome of the vote of Levitt’s shareholders with respect to the merger agreement. However, the merger will be consummated only if, as required by Florida law, it is approved by the holders of a majority of the outstanding shares of Levitt’s Class A Common Stock (of which the Company holds only approximately 11%) and, as required by the terms of the merger agreement, it is approved by the holders of a majority of Levitt’s Class A Common Stock voted at the meeting without counting the shares of Levitt’s Class A Common Stock voted by the Company. In both complaints, the plaintiffs seek to enjoin the merger or, if it is completed, to rescind it. The Company believes the lawsuits are without merit.