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2004

Plan and Agreement of Merger

Plan and Agreement of Merger (218K)

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PLAN AND AGREEMENT OF MERGER

DATED

AUGUST 29, 2004

AMONG

LNR PROPERTY CORPORATION,

RILEY PROPERTY HOLDINGS LLC

AND

RILEY ACQUISITION SUB CORP.
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TABLE OF CONTENTS

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ARTICLE I DEFINITIONS....................................................... 1

ARTICLE II THE TRANSACTIONS................................................. 11
Section 2.1 Parent Loan.................................................. 11
Section 2.2 Agreement to Effect Merger................................... 11
Section 2.3 The Merger................................................... 11
Section 2.4 Certificate of Incorporation................................. 11
Section 2.5 By-Laws...................................................... 11
Section 2.6 Directors.................................................... 12
Section 2.7 Officers..................................................... 12
Section 2.8 Stock of the Company......................................... 12
Section 2.9 Stock of Acquisition Sub..................................... 12
Section 2.10 Options and Stock Purchase Agreements....................... 12
Section 2.11 Convertible Notes........................................... 13
Section 2.12 Dissenting Shares........................................... 13
Section 2.13 Payment for Shares.......................................... 14

ARTICLE III COMPANY SCHEDULE 13E-3/PROXY STATEMENT AND STOCKHOLDERS MEETING. 16
Section 3.1 The Special Meeting.......................................... 16
Section 3.2 Company Schedule 13E-3; Proxy Statement...................... 16
Section 3.3 Information for Company Schedule 13E-3 and Proxy Statement... 17

ARTICLE IV EFFECTIVE TIME OF MERGER......................................... 18
Section 4.1 Execution of Certificate of Merger........................... 18
Section 4.2 Date of the Merger........................................... 18
Section 4.3 Effective Time of the Merger................................. 20

ARTICLE V REPRESENTATIONS AND WARRANTIES.................................... 20
Section 5.1 Representations and Warranties of the Company................ 20
Section 5.2 Representations and Warranties of Parent and Acquisition Sub. 37
Section 5.3 Termination of Representations and Warranties................ 39

ARTICLE VI ACTIONS PRIOR TO THE MERGER...................................... 39
Section 6.1 Activities Until Effective Time.............................. 39
Section 6.2 HSR Act Filings; Competition Approvals....................... 42
Section 6.3 Cooperation.................................................. 43
Section 6.4 No Solicitation of Offers; Notice of Proposals from Others... 44
Section 6.5 Subsequent Filings........................................... 47
Section 6.6 Communication to Employees................................... 47
Section 6.7 Internal Reorganization...................................... 47
Section 6.8 Tax Matters.................................................. 47
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ARTICLE VII CONDITIONS PRECEDENT TO MERGER.................................. 48
Section 7.1 Conditions to Each Party's Obligation to Effect the
Transactions................................................. 48
Section 7.2 Conditions to the Company's Obligations...................... 48
Section 7.3 Conditions to Parent's and Acquisition Sub's Obligations..... 49

ARTICLE VIII TERMINATION.................................................... 51
Section 8.1 Right to Terminate........................................... 51
Section 8.2 Manner of Terminating Agreement.............................. 53
Section 8.3 Effect of Termination........................................ 53
Section 8.4 Fees and Expenses............................................ 53

ARTICLE IX ABSENCE OF BROKERS............................................... 54
Section 9.1 Representations and Warranties Regarding Brokers and Others.. 54

ARTICLE X OTHER AGREEMENTS.................................................. 55
Section 10.1 Indemnification for Prior Acts.............................. 55
Section 10.2 Benefit of Provisions....................................... 55

ARTICLE XI GENERAL.......................................................... 55
Section 11.1 Expenses.................................................... 55
Section 11.2 Transfer Taxes.............................................. 55
Section 11.3 Access to Properties, Books and Records..................... 55
Section 11.4 Press Releases.............................................. 56
Section 11.5 Entire Agreement............................................ 56
Section 11.6 Benefit of Agreement........................................ 56
Section 11.7 Effect of Disclosures....................................... 56
Section 11.8 Captions.................................................... 57
Section 11.9 Assignments................................................. 57
Section 11.10 Notices and Other Communications........................... 57
Section 11.11 Governing Law.............................................. 58
Section 11.12 Amendments................................................. 58
Section 11.13 Counterparts............................................... 58
Section 11.14 Consent to Jurisdiction.................................... 58
Section 11.15 Remedies; Specific Performance............................. 59
Section 11.16 Waiver of Jury Trial....................................... 59
Section 11.17 Schedules.................................................. 59

Exhibit A: Form of By-Laws of the Surviving Corporation
Exhibit B: Form of Certificate of Merger
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PLAN AND AGREEMENT OF MERGER

This is a Plan and Agreement of Merger (the "Agreement"), dated as
of August 29, 2004, made by and among LNR PROPERTY CORPORATION (the "Company"),
a Delaware corporation, RILEY PROPERTY HOLDINGS LLC ("Parent"), a Delaware
limited liability company and RILEY ACQUISITION SUB CORP., a Delaware
corporation ("Acquisition Sub"). Parent, Acquisition Sub and the Company are
each individually referred to herein as a "party" and together collectively
referred to herein as the "parties."

W I T N E S S E T H:

WHEREAS, the respective Boards of Directors of the Company, Parent
and Acquisition Sub have declared this Agreement advisable and approved the
merger of Acquisition Sub with and into the Company, with the Company surviving
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement and the Delaware General Corporation Law, as such law is in effect
from time to time (the "DGCL");

WHEREAS, the respective Boards of Directors of Parent, Acquisition
Sub and the Company have determined that the Merger is in the best interest of
their respective stockholders; and

WHEREAS, as inducement and a condition to Parent's willingness to
enter into this Agreement, Parent, the Company and certain of the Company
Stockholders have entered into a voting agreement, dated as of the date hereof
(the "Voting Agreement"), pursuant to which the Company's stockholders party
thereto have agreed, among other things, to vote the shares of Company Common
Stock (as hereafter defined) held by them, in favor of the Merger and the
adoption of this Agreement; and

WHEREAS, Parent and certain executives of the Company have entered
into or will enter into various agreements relating to their continued
employment with the Company following the Merger and certain payments to which
they are entitled on the Effective Date.

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants, agreements and mutual promises set forth
below, the parties agree as follows:

ARTICLE I

DEFINITIONS

"Acquisition Sub" shall have the meaning set forth in the
introductory paragraph hereto.

"Acquisition Common Stock" shall have the meaning set forth in
Section 2.9.

"Acquisition Proposal" shall mean (a) any inquiry, proposal or offer
(including any proposal to the Company Stockholders) from any Person or group
relating to (i) any direct or indirect acquisition or purchase of 15% or more of
the consolidated assets of the Company and
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its Subsidiaries (other than a proposal relating to a purchase or sale of assets
in the ordinary course of business that would not violate this Agreement) or 15%
or more of any class of equity securities of the Company or any of its
Subsidiaries in a single transaction or a series of related transactions, (ii)
any tender offer (including a self-tender offer) or exchange offer that, if
consummated, would result in any Person or group becoming the beneficial owner
of 15% or more of any class of equity securities of the Company or any of its
Subsidiaries or the filing with the SEC of a Schedule TO, a Schedule 13E-3 or a
registration statement under the Securities Act in connection therewith, (iii)
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries (other than in the ordinary course of business that would not
affect any of the Transactions or the Merger Financings), or (iv) any other
transaction the consummation of which could reasonably be expected to materially
impede, prevent or materially delay consummation of the Merger or (b) any public
announcement by or on behalf of the Company, any of its Subsidiaries or any of
their respective Affiliates (or any of their respective Representatives) or by
any Third Party of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing, in each case other than the
Transactions.

"Action or Proceeding" shall mean any litigation, action, suit,
proceeding, pleading, claim, arbitration or government investigation or review.

"Affiliate" of any Person shall mean any Person that controls, is
controlled by, or is under common control with such Person. As used herein, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power

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