Indenture dated as of March 17, 2003



 
Exhibit 4.1

 

 
WILLIAM LYON HOMES, INC., 
 
THE GUARANTORS named herein 
 
and 
 
U.S. BANK NATIONAL ASSOCIATION, as Trustee 
 

 
INDENTURE 
 
Dated as of March 17, 2003 
 

 
10 3/4% Senior Notes due 2013

 








 
CROSS-REFERENCE
TABLE 
 

	 TIA Section

	  	 Indenture
 Section

	 
	 310(a)(1)
	  	 7.10
	  

	 (a)(2)
	  	 7.10
	  

	 (a)(3)
	  	 N.A.
	  

	 (a)(4)
	  	 N.A.
	  

	 (a)(5)
	  	 N.A.
	  

	 (b)
	  	 7.08; 7.10; 12.02
	  

	 (b)(1)
	  	 7.10
	  

	 (c)
	  	 N.A.
	  

	 311(a)
	  	 7.11
	  

	 (b)
	  	 7.11
	  

	 (c)
	  	 N.A.
	  

	 312(a)
	  	 2.06
	  

	 (b)
	  	 12.03
	  

	 (c)
	  	 12.03
	  

	 313(a)
	  	 7.06
	  

	 (b)(1)
	  	 N.A.
	  

	 (b)(2)
	  	 7.06
	  

	 (c)
	  	 7.06; 12.02
	  

	 (d)
	  	 7.06
	  

	 314(a)
	  	 4.02; 4.04; 12.02
	  

	 (b)
	  	 N.A.
	  

	 (c)(1)
	  	 12.04
	  

	 (c)(2)
	  	 12.04
	  

	 (c)(3)
	  	 N.A.
	  

	 (d)
	  	 N.A.
	  

	 (e)
	  	 12.05
	  

	 (f)
	  	 N.A.
	  

	 315(a)
	  	 7.01
	 (b)

	 (b)
	  	 7.05; 12.02
	  

	 (c)
	  	 7.01
	 (a)

	 (d)
	  	 7.01
	 (c)

	 (e)
	  	 6.12
	  

	 316(a) (last sentence)
	  	 2.10
	  

	 (a)(1)(A)
	  	 6.05
	  

	 (a)(1)(B)
	  	 6.04
	  

	 (a)(2)
	  	 N.A.
	  

	 (b)
	  	 6.08
	  

	 (c)
	  	 8.04
	  

	 317(a)(1)
	  	 6.09
	  

	 (a)(2)
	  	 6.10
	  

	 (b)
	  	 2.05; 7.12
	  

	 318(a)
	  	 12.01
	  




	N.A.	 	means Not Applicable 


	Note:	 	This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture 








 
TABLE OF
CONTENTS 
 

	 	  	 	  	 Page


	 ARTICLE ONE

	
	 DEFINITIONS AND INCORPORATION BY
REFERENCE

	
	 SECTION 1.01.
	  	 Definitions
	  	 1

	 SECTION 1.02.
	  	 Other Definitions
	  	 33

	 SECTION 1.03.
	  	 Incorporation by Reference of Trust Indenture Act
	  	 34

	 SECTION 1.04.
	  	 Rules of Construction
	  	 35

	
	 ARTICLE TWO

	
	 THE NOTES

	
	 SECTION 2.01.
	  	 Amount of Notes
	  	 35

	 SECTION 2.02.
	  	 Form and Dating
	  	 36

	 SECTION 2.03.
	  	 Execution and Authentication
	  	 36

	 SECTION 2.04.
	  	 Registrar and Paying Agent
	  	 37

	 SECTION 2.05.
	  	 Paying Agent To Hold Money in Trust
	  	 37

	 SECTION 2.06.
	  	 Holder Lists
	  	 38

	 SECTION 2.07.
	  	 Transfer and Exchange
	  	 38

	 SECTION 2.08.
	  	 Replacement Notes
	  	 39

	 SECTION 2.09.
	  	 Outstanding Notes
	  	 39

	 SECTION 2.10.
	  	 Treasury Notes
	  	 40

	 SECTION 2.11.
	  	 Temporary Notes
	  	 40

	 SECTION 2.12.
	  	 Cancellation
	  	 40

	 SECTION 2.13.
	  	 Defaulted Interest
	  	 40

	 SECTION 2.14.
	  	 CUSIP Number
	  	 41

	 SECTION 2.15.
	  	 Deposit of Moneys
	  	 41

	 SECTION 2.16.
	  	 Book-Entry Provisions for Global Notes
	  	 41

	 SECTION 2.17.
	  	 Computation of Interest
	  	 43

	
	 ARTICLE THREE

	
	 REDEMPTION

	
	 SECTION 3.01.
	  	 Election To Redeem; Notices to Trustee
	  	 43

	 SECTION 3.02.
	  	 Selection by Trustee of Notes To Be Redeemed
	  	 43

	 SECTION 3.03.
	  	 Notice of Redemption
	  	 44

	 SECTION 3.04.
	  	 Effect of Notice of Redemption
	  	 45

	 SECTION 3.05.
	  	 Deposit of Redemption Price
	  	 45


 

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	 	  	 	  	 Page


	 SECTION 3.06.
	  	 Notes Redeemed in Part
	  	 45

	
	 ARTICLE FOUR

	
	 COVENANTS

	
	 SECTION 4.01.
	  	 Payment of Notes
	  	 46

	 SECTION 4.02.
	  	 Reports to Holders
	  	 46

	 SECTION 4.03.
	  	 Waiver of Stay, Extension or Usury Laws
	  	 46

	 SECTION 4.04.
	  	 Compliance Certificate
	  	 47

	 SECTION 4.05.
	  	 Taxes
	  	 47

	 SECTION 4.06.
	  	 Limitations on Additional Indebtedness
	  	 48

	 SECTION 4.07.
	  	 [Intentionally Omitted]
	  	 50

	 SECTION 4.08.
	  	 Limitations on Restricted Payments
	  	 50

	 SECTION 4.09.
	  	 Limitations on Asset Sales
	  	 52

	 SECTION 4.10.
	  	 Limitations on Transactions with Affiliates
	  	 54

	 SECTION 4.11.
	  	 Limitations on Liens
	  	 56

	 SECTION 4.12.
	  	 Conduct of Business
	  	 57

	 SECTION 4.13.
	  	 Additional Note Guarantees
	  	 57

	 SECTION 4.14.
	  	 Limitations on Dividend and Other Restrictions Affecting Restricted Subsidiaries
	  	 57

	 SECTION 4.15.
	  	 Limitations on Designation of Unrestricted Subsidiaries
	  	 59

	 SECTION 4.16.
	  	 Maintenance of Consolidated Tangible Net Worth
	  	 61

	 SECTION 4.17.
	  	 Maintenance of Properties; Insurance; Compliance with Law
	  	 62

	 SECTION 4.18.
	  	 Payments for Consent
	  	 62

	 SECTION 4.19.
	  	 Legal Existence
	  	 63

	 SECTION 4.20.
	  	 Change of Control Offer
	  	 63

	
	 ARTICLE FIVE

	
	 SUCCESSOR CORPORATION

	
	 SECTION 5.01.
	  	 Limitations on Mergers, Consolidations, Etc.
	  	 64

	 SECTION 5.02.
	  	 Successor Person Substituted
	  	 66

	
	 ARTICLE SIX

	
	 DEFAULTS AND REMEDIES

	
	 SECTION 6.01.
	  	 Events of Default
	  	 66

	 SECTION 6.02.
	  	 Acceleration
	  	 68

	 SECTION 6.03.
	  	 Other Remedies
	  	 68

	 SECTION 6.04.
	  	 Waiver of Past Defaults and Events of Default
	  	 69


 

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	 	  	 	  	 Page


	 SECTION 6.05.
	  	 Control by Majority
	  	 69

	 SECTION 6.06.
	  	 Limitation on Suits
	  	 69

	 SECTION 6.07.
	  	 No Personal Liability of Directors, Officers, Employees and Stockholders
	  	 70

	 SECTION 6.08.
	  	 Rights of Holders To Receive Payment
	  	 70

	 SECTION 6.09.
	  	 Collection Suit by Trustee
	  	 70

	 SECTION 6.10.
	  	 Trustee May File Proofs of Claim
	  	 70

	 SECTION 6.11.
	  	 Priorities
	  	 71

	 SECTION 6.12.
	  	 Undertaking for Costs
	  	 71

	 SECTION 6.13.
	  	 Restoration of Rights and Remedies
	  	 72

	
	 ARTICLE SEVEN

	
	 TRUSTEE

	
	 SECTION 7.01.
	  	 Duties of Trustee
	  	 72

	 SECTION 7.02.
	  	 Rights of Trustee
	  	 73

	 SECTION 7.03.
	  	 Individual Rights of Trustee
	  	 74

	 SECTION 7.04.
	  	 Trustee’s Disclaimer
	  	 74

	 SECTION 7.05.
	  	 Notice of Defaults
	  	 75

	 SECTION 7.06.
	  	 Reports by Trustee to Holders
	  	 75

	 SECTION 7.07.
	  	 Compensation and Indemnity
	  	 75

	 SECTION 7.08.
	  	 Replacement of Trustee
	  	 76

	 SECTION 7.09.
	  	 Successor Trustee by Consolidation, Merger, etc.
	  	 77

	 SECTION 7.10.
	  	 Eligibility; Disqualification
	  	 77

	 SECTION 7.11.
	  	 Preferential Collection of Claims Against Issuer
	  	 78

	 SECTION 7.12.
	  	 Paying Agents
	  	 78

	
	 ARTICLE EIGHT

	
	 AMENDMENTS, SUPPLEMENTS AND
WAIVERS

	
	 SECTION 8.01.
	  	 Without Consent of Holders
	  	 78

	 SECTION 8.02.
	  	 With Consent of Holders
	  	 79

	 SECTION 8.03.
	  	 Compliance with Trust Indenture Act
	  	 80

	 SECTION 8.04.
	  	 Revocation and Effect of Consents
	  	 80

	 SECTION 8.05.
	  	 Notation on or Exchange of Notes
	  	 81

	 SECTION 8.06.
	  	 Trustee To Sign Amendments, etc.
	  	 81

	
	 ARTICLE NINE

	
	 DISCHARGE OF INDENTURE;
DEFEASANCE

	
	 SECTION 9.01.
	  	 Discharge of Indenture
	  	 82


 

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	 	  	 	  	 Page


	
	 SECTION 9.02.
	  	 Legal Defeasance
	  	 83

	 SECTION 9.03.
	  	 Covenant Defeasance
	  	 83

	 SECTION 9.04.
	  	 Conditions to Defeasance or Covenant Defeasance
	  	 84

	 SECTION 9.05.
	  	 Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous
Provisions
	  	 85

	 SECTION 9.06.
	  	 Reinstatement
	  	 86

	 SECTION 9.07.
	  	 Moneys Held by Paying Agent
	  	 86

	 SECTION 9.08.
	  	 Moneys Held by Trustee
	  	 86

	
	 ARTICLE TEN

	
	 GUARANTEE OF NOTES

	
	 SECTION 10.01.
	  	 Guarantee
	  	 87

	 SECTION 10.02.
	  	 Execution and Delivery of Guarantee
	  	 88

	 SECTION 10.03.
	  	 Limitation of Guarantee
	  	 88

	 SECTION 10.04.
	  	 Release of Guarantor
	  	 89

	 SECTION 10.05.
	  	 Waiver of Subrogation
	  	 89

	
	 ARTICLE ELEVEN

	
	 [INTENTIONALLY OMITTED]

	
	 ARTICLE TWELVE

	
	 MISCELLANEOUS

	
	 SECTION 12.01.
	  	 Trust Indenture Act Controls
	  	 90

	 SECTION 12.02.
	  	 Notices
	  	 90

	 SECTION 12.03.
	  	 Communications by Holders with Other Holders
	  	 91

	 SECTION 12.04.
	  	 Certificate and Opinion as to Conditions Precedent
	  	 92

	 SECTION 12.05.
	  	 Statements Required in Certificate and Opinion
	  	 92

	 SECTION 12.06.
	  	 Rules by Trustee and Agents
	  	 92

	 SECTION 12.07.
	  	 Governing Law
	  	 93

	 SECTION 12.08.
	  	 No Adverse Interpretation of Other Agreements
	  	 93

	 SECTION 12.09.
	  	 No Recourse Against Others
	  	 93

	 SECTION 12.10.
	  	 Successors
	  	 93

	 SECTION 12.11.
	  	 Multiple Counterparts
	  	 94

	 SECTION 12.12.
	  	 Table of Contents, Headings, etc.
	  	 94

	 SECTION 12.13.
	  	 Separability
	  	 94


 

-iv- 









	 	  	 	  	 Page


	 EXHIBITS
	  	 	  	 
	
	 Exhibit A.
	  	 Form of Note
	  	 A-1

	 Exhibit B.
	  	 Form of Legend for Global Note
	  	 B-1

	 Exhibit C.
	  	 Form of Guarantee
	  	 C-1


 

-v- 








 
INDENTURE,
dated as of March 17, 2003, among WILLIAM LYON HOMES, INC., a California corporation, as issuer (the “Issuer”), the Guarantors (as hereinafter defined) and U.S. BANK NATIONAL ASSOCIATION, as trustee (the “Trustee”).

 
Each party agrees as follows for the benefit of
the other parties and for the equal and ratable benefit of the Holders. 
 
ARTICLE ONE 
 
DEFINITIONS
AND INCORPORATION BY REFERENCE 
 
SECTION 1.01. Definitions.

 
“Acquired Indebtedness” means
(1) with respect to any Person that becomes a Restricted Subsidiary after the Issue Date (other than a Consolidated Joint Venture or a Restricted Joint Venture), Indebtedness of such Person and its Subsidiaries existing at the time such Person
becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (2) with respect to the Parent or any Restricted Subsidiary, any Indebtedness of a Person (other than
the Parent or a Restricted Subsidiary) existing at the time such Person is merged with or into the Parent or a Restricted Subsidiary, or Indebtedness expressly assumed by the Parent or any Restricted Subsidiary in connection with the acquisition of
an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition. 
 
“Additional Notes” shall mean up to $150.0 million aggregate principal amount of Notes
having identical terms and conditions to the Notes issued pursuant to Article Two and in compliance with Section 4.06. 
 
“Adjusted Net Assets” of a Guarantor at any date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities), but excluding liabilities under the Guarantee, of such
Guarantor at such date and (y) the present fair salable value of the assets of such Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Guarantor on its debts and all other fixed and contingent
liabilities (after giving effect to all other fixed and contingent liabilities and after giving effect to any collection from any Subsidiary of such Guarantor in respect of the obligations of such Guarantor under the Guarantee), excluding
Indebtedness in respect of the Guarantee, as they become absolute and matured. 
 
“Affiliate” of any Person means any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person. For
purposes of Section 4.10, Affiliates shall be deemed to include, with respect to 







 
any Person, any other Person
(1) which beneficially owns or holds, directly or indirectly, 10% or more of any class of the Voting Stock of the referent Person, (2) of which 10% or more of the Voting Stock is beneficially owned or held, directly or indirectly, by the referent
Person or (3) with respect to an individual, any immediate family member of such Person. For purposes of this definition, “control” of a Person shall mean the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise. 
 
“Agent” means any Registrar, Paying Agent or agent for service or notices and demands. 
 
“amend” means to amend, supplement, restate, amend and restate or otherwise modify; and “amendment” shall have
a correlative meaning. 
 
“asset”
means any asset or property. 
 
“Asset
Acquisition” means: 
 
(1) an Investment by the Parent or any Restricted Subsidiary in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary, or shall be merged with or into the Parent or any Restricted
Subsidiary, or 
 
(2) the
acquisition by the Parent or any Restricted Subsidiary of all or substantially all of the assets of any other Person or any division or line of business of any other Person. 
 
“Asset Sale” means any sale, issuance, conveyance, transfer, lease, assignment or other
disposition by the Parent or any Restricted Subsidiary to any Person other than the Parent or any Restricted Subsidiary (including by means of a Sale and Leaseback Transaction or a merger or consolidation) (collectively, for purposes of this
definition, a “transfer”), in one transaction or a series of related transactions, of any assets (including Equity Interests) of the Parent or any of its Restricted Subsidiaries other than in the ordinary course of business. For
purposes of this definition, the term “Asset Sale” shall not include: 
 
(1) transfers of cash or Cash Equivalents; 
 
(2) transfers of assets (including Equity Interests) that are governed by, and made in accordance with Section 5.01.

 
(3) Permitted Investments and
Restricted Payments permitted under Section 4.08. 
 
(4) the creation or realization of any Permitted Lien; 
 

-2- 








(5) transactions in the ordinary course of business, including, without
limitation, dedications and other donations to governmental authorities, sales (directly or indirectly), leases, sales and leasebacks and other dispositions of (A) homes, improved land and unimproved land, whether in single or multiple lots, (B)
real estate (including related amenities and improvements), whether in single or multiple lots and (C) Equity Interests of a Subsidiary, the assets of which consist entirely of amenities and improvements related to real estate, such as golf courses,
and real estate underlying such amenities and improvements; 
 
(6) dispositions of mortgage loans and related assets and mortgage-backed securities in the ordinary course of a mortgage lending business; and 
 
(7) any transfer or series of related
transfers that, but for this clause, would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the assets transferred in such transaction or any such series of related transactions does not exceed $2.0
million. 
 
“Attributable
Indebtedness”, when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, the present value (discounted at a rate equivalent to the Issuer’s then-current weighted average cost of funds for
borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of any Capitalized Lease included in any such Sale and Leaseback Transaction.

 
“Bankruptcy Law” means Title 11
of the United States Code, as amended, or any similar federal or state law for the relief of debtors. 
 
“Board of Directors” means, with respect to any Person, the board of directors or comparable governing body of such
Person. 
 
“Board Resolution”
means a copy of a resolution certified pursuant to an Officers’ Certificate to have been duly adopted by the Board of Directors of the Issuer and to be in full force and effect, and delivered to the Trustee. 
 
“Borrowing Base” means, at any time of
determination, the sum of the following without duplication: 
 
(1) 100% of all cash and Cash Equivalents held by the Parent, any Restricted Subsidiary (other than a Consolidated Joint Venture) or any Restricted Joint Venture; 
 
(2) 80% of the book value of Developed Land
for which no construction has occurred; 
 

-3- 








 
(3) 90% of the cost of the land and construction costs including capitalized interest (as reasonably allocated by the Parent) for all Units for which there is an executed purchase contract with a buyer not Affiliated with the Parent,
less any deposits, down payments or earnest money; 
 
(4) 85% of the cost of the land and construction costs including capitalized interest (as reasonably allocated by the Parent) for all Units for which construction has begun and for which there is not an executed purchase
agreement with a buyer not Affiliated with the Parent; and 
 
(5) 50% of the costs of Entitled Land (other than Developed Land) on which improvements have not commenced, less mortgage Indebtedness (other than under a Credit Facility) applicable to such land;

 
provided that the aggregate amount of assets of a
Restricted Joint Venture (whether or not it is a Restricted Subsidiary) comprising a portion of the Borrowing Base shall not exceed, at such time of determination, 125% of the amount of Permitted Restricted Joint Venture Indebtedness then
outstanding of such Restricted Joint Venture. 
 
“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in New York are authorized or required by law to close. 
 
“Capitalized Lease” means a lease required to be capitalized for financial reporting
purposes in accordance with GAAP. 
 
“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a Capitalized Lease, and the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP. 
 
“Cash Equivalents” means: 
 
(1) marketable obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; 
 
(2) demand and time deposits and certificates
of deposit or acceptances with a maturity of 180 days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million and is assigned at
least a “B” rating by Thomson Financial BankWatch; 
 
(3) commercial paper maturing no more than 180 days from the date of creation thereof issued by a corporation that is not the Parent or an Affiliate of the 
 

-4- 








 
Parent, and
is organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s; 
 
(4) repurchase obligations with a term of not more than ten days for underlying securities of
the types described in clause (1) above entered into with any commercial bank meeting the specifications of clause (2) above; and 
 
(5) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types
described in clauses (1) through (4) above. 
 
“Change of Control” means the occurrence of any of the following events: 
 
(1) the Parent shall cease to own beneficially and of record all of the Equity Interests of the Issuer; 
 
(2) any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for
purposes of this clause that person or group shall be deemed to have “beneficial ownership” of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of Voting Stock representing more than 50% of the voting power of the total outstanding Voting Stock of the Parent; 
 
(3) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of
Directors of the Parent (together with any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Parent was approved by a vote of the majority of the directors of the Parent then still in
office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Parent; 
 
(4) (a) all or substantially all of the
assets of the Parent and the Restricted Subsidiaries are sold or otherwise transferred to any Person other than a Wholly-Owned Restricted Subsidiary or one or more Permitted Holders or (b) the Parent consolidates or merges with or into another
Person other than a Permitted Holder or any Person other than a Permitted Holder consolidates or merges with or into the Parent, in either case under this clause (4), in one transaction or a series of related transactions in which immediately after
the consummation thereof Persons owning Voting Stock representing in the aggregate 100% of the total voting power of the Voting Stock of the Parent immediately prior to such consummation do not own Voting Stock representing 
 

-5- 








 
a majority of
the total voting power of the Voting Stock of the Parent or the surviving or transferee Person; or 
 
(5) the Parent or the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the
stockholders of the Parent or the Issuer. 
 
“Consolidated Amortization Expense” for any period means the amortization expense of the Parent and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 
“Consolidated Cash Flow Available for
Fixed Charges” for any period means, without duplication, the sum of the amounts for such period of 
 
(1) Consolidated Net Income, plus 
 
(2) in each case only to the extent (and in the same proportion) deducted in determining
Consolidated Net Income and with respect to the portion of Consolidated Net Income attributable to any Restricted Subsidiary (other than the Issuer) only if a corresponding amount would be permitted at the date of determination to be distributed to
the Issuer or the Parent by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted Subsidiary or its stockholders, 
 
(a) Consolidated Income Tax Expense, 
 
(b) Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense),

 
(c) Consolidated Depreciation
Expense, 
 
(d) Consolidated
Interest Expense and interest and other charges amortized to “cost of sales – homes” or “cost of sales – lots, land and other”, and 
 
(e) all other non-cash items reducing the Consolidated Net Income (excluding any non-cash
charge that results in an accrual of a reserve for cash charges in any future period) for such period, 
 
in each case determined on a consolidated basis in accordance with GAAP, minus 
 
(3) the aggregate amount of all non-cash
items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period. 
 

-6- 








 
“Consolidated Depreciation Expense” for any period means the depreciation expense of the Parent and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 
“Consolidated Fixed Charge Coverage
Ratio” means the ratio of Consolidated Cash Flow Available for Fixed Charges during the most recent four consecutive full fiscal quarters for which internal financial statements are available (the “Four-Quarter Period”)
ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the “Transaction Date”) to Consolidated Interest Incurred for the Four-Quarter Period. For purposes
of this definition, Consolidated Cash Flow Available for Fixed Charges and Consolidated Interest Incurred shall be calculated after giving effect on a pro forma basis for the period of such calculation to: 
 
(1) the incurrence of any Indebtedness, the
inclusion of any Indebtedness on the balance sheet or the issuance of any Preferred Stock, in each case of the Parent or any Restricted Subsidiary (and the application of the proceeds thereof) and any repayment of other Indebtedness or redemption of
other Preferred Stock (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring
during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence, repayment, issuance or redemption, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four-Quarter Period; and 
 
(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Parent or any Restricted Subsidiary
(including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring Acquired Indebtedness and also including any Consolidated Cash Flow Available for Fixed Charges (including any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the Exchange Act) associated with any such Asset Acquisition) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on
or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition or other disposition (including the incurrence of, or assumption or liability for, any such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four-Quarter Period. 
 
If the Parent or any
Restricted Subsidiary directly or indirectly guarantees Indebtedness of a third Person (other than a Restricted Subsidiary, in the case of the Parent, or the Parent or another Restricted Subsidiary, in the case of a Restricted Subsidiary), the
preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if the 
 

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Parent or such Restricted
Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness. 
 
In calculating Consolidated Interest Incurred for purposes of determining the denominator (but not the numerator) of this Consolidated Fixed Charge Coverage Ratio: 
 
(1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on this Indebtedness in effect on the
Transaction Date; 
 
(2) if
interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the Four-Quarter Period; and 
 
(3) notwithstanding clause (1) or (2) above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements with a term of at least one year after the Transaction Date relating to Hedging Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of these agreements.

 
“Consolidated Income Tax
Expense” for any period means the provision for taxes of the Parent and the Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. 
 
“Consolidated Indebtedness” means, as of any date, the total Indebtedness of the Parent and
the Restricted Subsidiaries as of such date, determined on a consolidated basis. 
 
“Consolidated Interest Expense” for any period means the sum, without duplication, of the total interest expense (other than interest and other charges amortized to “cost of sales
– homes” or “cost of sales – lots, land and other”) of the Parent and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and including, without duplication, 
 
(1) imputed interest on Capitalized Lease
Obligations and Attributable Indebtedness, 
 
(2) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations, bankers’ acceptance financing and receivables financings, 
 

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(3) the net costs associated with Hedging Obligations, 
 
(4) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses, 
 
(5) the interest portion of any deferred payment obligations, 
 
(6) all other non-cash interest expense,

 
(7) the product of (a) all
dividend payments on any series of Disqualified Equity Interests of the Parent or any Preferred Stock of any Restricted Subsidiary (other than any such Disqualified Equity Interests or any Preferred Stock held by the Parent or a Wholly-Owned
Restricted Subsidiary), multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Parent and the Restricted
Subsidiaries, expressed as a decimal, 
 
(8) all interest payable with respect to discontinued operations, and 
 
(9) all interest on any Indebtedness of any other Person (other than a Restricted Subsidiary, in the case of the Parent,
or the Parent or another Restricted Subsidiary, in the case of a Restricted Subsidiary) guaranteed by the Parent or any Restricted Subsidiary. 
 
“Consolidated Interest Incurred” for any period means the sum, without duplication, of (1) Consolidated Interest Expense
and (2) interest capitalized for such period (including interest capitalized with respect to discontinued operations but not including interest or other charges amortized to “cost of sales – homes” or “cost of sales – lots,
land and other”). 
 
“Consolidated
Joint Venture” means a Joint Venture in existence on the Issue Date which becomes a Subsidiary because of a change in GAAP relating to consolidation. 
 
“Consolidated Joint Venture Indebtedness” means Indebtedness of Consolidated Joint Ventures included on the consolidated
balance sheet of the Parent and its Restricted Subsidiaries. 
 
“Consolidated Net Income” for any period means the net income (or loss) of the Parent and the Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included therein), without duplication: 
 
(1) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Parent
or any of its Restricted Subsidiaries 
 

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has an
ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by the Parent or any of its Restricted Subsidiaries during such period; 
 
(2) except to the extent includible in the consolidated net income of the Parent pursuant to
the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Parent or any Restricted Subsidiary or (b) the assets of
such Person are acquired by the Parent or any Restricted Subsidiary; 
 
(3) the net income of any Restricted Subsidiary (other than the Issuer) during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period; 
 
(4) that portion of the net income of any
Restricted Subsidiary (other than the Issuer) that is not a Guarantor and is not a Wholly-Owned Restricted Subsidiary attributable to the portion of the Equity Interests of such Restricted Subsidiary that is not owned by the Parent or the Restricted
Subsidiaries; 
 
(5) for the
purposes of calculating the Restricted Payments Basket only, in the case of a successor to the Parent or the Issuer by consolidation, merger or transfer of its assets, any income (or loss) of the successor prior to such merger, consolidation or
transfer of assets; 
 
(6) other
than for purposes of calculating the Restricted Payments Basket, any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by the Parent or any Restricted
Subsidiary upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Parent or any Restricted Subsidiary or (b) any Asset Sale by the Parent or any Restricted Subsidiary; and 
 
(7) other than for purposes of calculating
the Restricted Payments Basket, any extraordinary gain (or extraordinary loss), together with any related provision for taxes on any such extraordinary gain (or the tax effect of any such extraordinary loss), realized by the Parent or any Restricted
Subsidiary during such period. 
 
In addition, any
return of capital with respect to an Investment that increased the Restricted Payments Basket pursuant to clause (3)(d) of the first paragraph of Section 4.08 or decreased the amount of Investments outstanding pursuant to clause (14) of the
definition 
 

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of “Permitted Investments” shall be excluded from Consolidated Net Income for purposes of
calculating the Restricted Payments Basket. 
 
“Consolidated Net Worth” means, with respect to any Person as of any date, the consolidated stockholders’ equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without
duplication) (1) any amounts thereof attributable to Disqualified Equity Interests of such Person or its Subsidiaries or any amount attributable to Unrestricted Subsidiaries (other than Cerro Plata Associates, LLC and 242 Cerro Plata, LLC) and (2)
all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within twelve months after the acquisition of such business) subsequent to the Issue Date in the book
value of any asset owned by such Person or a Subsidiary of such Person. 
 
“Consolidated Tangible Assets” means, as of any date, the total amount of assets of the Parent and the Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter immediately preceding
such date, as determined in accordance with GAAP, less (1) Intangible Assets and (2) any assets securing Non-Recourse Indebtedness. 
 
“Consolidated Tangible Net Worth” means, with respect to any Person as of any date, the Consolidated Net Worth of such
Person as of such date less (without duplication) all Intangible Assets of such Person as of such date. 
 
“Credit Facilities” means (i) the Loan Agreement dated as of September 25, 2000 between the Issuer and Residential
Funding Corporation, as amended, (ii) the Master Loan Agreement dated as of August 31, 2000 between the Issuer and Guaranty Federal Bank, F.S.B, as amended, and (iii) the Revolving Line of Credit Loan Agreement dated as of September 21, 2000 between
the Issuer and California Bank & Trust, as amended, in each case (i), (ii) and (iii), including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith (including Hedging Obligations
related to the Indebtedness incurred thereunder), and in each case as amended or refinanced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of
borrowings or other Indebtedness outstanding or available to be borrowed thereunder) all or any portion of the Indebtedness under such agreements, and any successor or replacement agreement or agreements with the same or any other agents, creditor,
lender or group of creditors or lenders. Notwithstanding the foregoing, “Credit Facilities” shall not include any agreements relating to Consolidated Joint Venture Indebtedness or Permitted Restricted Joint Venture Indebtedness.

 
“Custodian” means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law. 
 
“Default” means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage of time or both, would be an Event of Default. 
 

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“Depository” means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depository by the Issuer, which Person must be a clearing
agency registered under the Exchange Act. 
 
“Designation” has the meaning given to this term in Section 4.15; and “Designate” and “Designated” shall have correlative meanings. 
 
“Designation Amount” has the meaning given to this term in Section 4.15. 
 
“Developed Land” means all Entitled Land of
the Parent, its Restricted Subsidiaries (other than Consolidated Joint Ventures) and the Restricted Joint Ventures which is undergoing active development or is ready for vertical construction. 
 
“Directly Related Assets” means, with respect
to any particular property, assets directly related thereto or derived therefrom, such as proceeds (including insurance proceeds), products, rents, and profits thereof and improvements and accessions thereto. 
 
“Disqualified Equity Interests” of any Person
means any class of Equity Interests of such Person that, by their terms, or by the terms of any related agreement or of any security into which they are convertible, puttable or exchangeable, are, or upon the happening of any event or the passage of
time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or mature or are mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date
which is 91 days after the final maturity date of the Notes; provided, however, that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of
dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that are not convertible, puttable or
exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not
Disqualified Equity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which
such Equity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to redeem such Equity Interests upon the occurrence of a change in control occurring prior to the final maturity date of the Notes shall not
constitute Disqualified Equity Interests if the change in control provisions applicable to such Equity Interests are no more favorable to such holders than the provisions of Section 4.20 and such Equity Interests specifically provide that such
Person will not redeem any such Equity Interests pursuant to such provisions prior to the Issuer’s purchase of the Notes as required pursuant to the provisions of Section 4.20. 
 

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“Entitled Land” means all land of the Parent, its Restricted Subsidiaries (other than Consolidated Joint Ventures) and the Restricted Joint Ventures (a) on which Units may be constructed or which may be utilized for
commercial, retail or industrial uses, in each case, under applicable laws and regulations and (b) the intended use by the Parent for which is permissible under the applicable regional plan, development agreement or applicable zoning ordinance.

 
“Equity Interests” of any
Person means (1) any and all shares or other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not
currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person. 
 
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. 
 
“Fair Market Value” means, with respect to
any asset, the price (after taking into account any liabilities relating to such assets) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction, as such price is determined in good faith by the Board of Directors of the Parent or a duly authorized committee thereof, as evidenced by a resolution of such Board or committee. 
 
“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect from time to time. 
 
“guarantee” means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any
obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or
by agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm’s-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part).
Notwithstanding the foregoing, the liability of a general partner for the Indebtedness of a partnership that is secured by assets of such partnership whose Fair Market Value on the Issue Date exceeds the amount of such Indebtedness shall not be
deemed to be a guarantee for purposes of this definition; provided that (i) the general partner has not otherwise guaranteed or assumed such Indebtedness, (ii) such Indebtedness is not included on 
 

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the balance sheet of the
general partner and is not required to be so included in accordance with GAAP as in effect on the date of such determination (except, in each case in this clause (ii), if the partnership was a Joint Venture which became a Subsidiary and which was
Designated as an Unrestricted Subsidiary in accordance with the fourth paragraph of Section 4.15), (iii) to the extent the aggregate amount of liabilities of the Parent and the Restricted Subsidiaries that would constitute guarantees but for this
sentence on the date of determination exceeds $115.0 million less the aggregate amount of Indebtedness outstanding under clause (15) of the definition of “Permitted Indebtedness” on the date of determination, then such excess shall be
deemed to be guarantees by the Parent and the Restricted Subsidiaries and (iv) such partnership was in existence on the Issue Date. “guarantee,” when used as a verb, and “guaranteed” have correlative meanings.

 
“Guarantors” means the Parent
and each Restricted Subsidiary of the Parent on the Issue Date (other than the Issuer), and each other Person that is required to become a Guarantor by the terms of this Indenture after the Issue Date, in each case, until such Person is released
from its Note Guarantee. On the Issue Date, the Guarantors will be the Parent, California Equity Funding, Inc., a California corporation, PH – LP Ventures, a California corporation, Duxford Financial, Inc., a California corporation, Sycamore
CC, Inc., a California corporation, Presley CMR, Inc., a California corporation, William Lyon Southwest, Inc., an Arizona corporation, PH -Reilly Ventures, a California corporation, Mountain Gate Ventures, Inc., an Arizona corporation, Carmel
Mountain Ranch, a California general partnership, HSP, Inc., a California corporation, PH Ventures—San Jose, a California corporation, Presley Homes, a California corporation, St. Helena Westminster Estates, LLC, a Delaware limited liability
company and OX I Oxnard, L.P., a California limited partnership. 
 
“Hedging Obligations” of any Person means the obligations of such Person pursuant to (1) any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect
such Person against fluctuations in interest rates, (2) agreements or arrangements designed to protect such Person against fluctuations in foreign currency exchange rates in the conduct of its operations, or (3) any forward contract, commodity swap
agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices, in each case entered into in the ordinary course of business for bona fide hedging purposes and
not for the purpose of speculation. 
 
“Holder” means any registered holder, from time to time, of the Notes. 
 
“incur” means, with respect to any Indebtedness or obligation, incur, create, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or obligation; provided that (1) the Indebtedness of a Person existing at the time such Person became a Restricted Subsidiary or at the time
such Person merged with or into the Parent or a Restricted Subsidiary shall be deemed to have been 
 

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incurred at such time and (2)
neither the accrual of interest nor the accretion of original issue discount shall be deemed to be an incurrence of Indebtedness. 
 
“Indebtedness” of any Person at any date means, without duplication: 
 
(1) all liabilities, contingent or otherwise,
of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); 
 
(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; 
 
(3) all obligations of such Person in respect
of letters of credit or other similar instruments (or reimbursement obligations with respect thereto); 
 
(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services; 
 
(5) the maximum fixed redemption or repurchase price of all Disqualified Equity Interests of such Person; 
 
(6) all Capitalized Lease Obligations of such
Person; 
 
(7) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; 
 
(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that (i)
Indebtedness of the Parent or its Subsidiaries that is guaranteed by the Parent or the Parent’s Subsidiaries shall be counted only once in the calculation of the amount of Indebtedness of the Parent and its Subsidiaries on a consolidated basis
and (ii) only the liabilities relating to any such guarantee that are recorded as liabilities, or required (in accordance with GAAP) to be recorded as liabilities, on the balance sheet of such Person shall be considered Indebtedness of such Person
(it being understood that any increase in liabilities recorded or required to be recorded on such Person’s balance sheet shall be deemed to be an “incurrence” of Indebtedness by such Person at the time of such increase); 
 
(9) all Attributable Indebtedness;

 
(10) to the extent not
otherwise included in this definition, Hedging Obligations of such Person; 
 

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(11) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person; and 
 
(12) the liquidation value of Preferred Stock of a Subsidiary of such Person issued and
outstanding and held by any Person other than such Person (or one of its Wholly-Owned Restricted Subsidiaries). 
 
Notwithstanding the foregoing, the following shall not be considered Indebtedness: (a) earn-outs or similar profit sharing or
participation arrangements provided for in acquisition agreements which are determined on the basis of future operating earnings or other similar performance criteria (which are not determinable at the time of acquisition) of the acquired assets or
entities, (b) accrued expenses, trade payables, customer deposits or deferred income taxes arising in the ordinary course of business, (c) the liability of a general partner for the Indebtedness of a partnership that is secured by assets of such
partnership whose Fair Market Value on the Issue Date exceeds the amount of such Indebtedness; provided that, in the case of this clause (c), (i) the general partner has not otherwise guaranteed or assumed such Indebtedness, (ii) such
Indebtedness is not included on the balance sheet of the general partner and is not required to be so included in accordance with GAAP as in effect on the date of such determination (except, in each case in this clause (ii), if the partnership is a
Consolidated Joint Venture which was Designated as an Unrestricted Subsidiary in accordance with the fourth paragraph of Section 4.15), (iii) to the extent the aggregate amount of liabilities of the Parent and the Restricted Subsidiaries that would
constitute Indebtedness but for this clause (c) on the date of determination exceeds $115.0 million less the aggregate amount of Indebtedness outstanding under clause (15) of the definition of “Permitted Indebtedness” on the date of
determination, then such excess shall be considered Indebtedness of the Parent and the Restricted Subsidiaries and (iv) such partnership was in existence on the Issue Date, (d) completion guarantees entered into in the ordinary course of business
and (e) obligations in respect of district improvement bonds pertaining to roads, sewers and other infrastructure. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as
described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the
date that the Lien attaches and (b) the amount of the Indebtedness secured; provided, however, that the amount outstanding at any time of any Indebtedness issued with original issue discount shall be deemed to be the face amount of
such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time, as determined in accordance with GAAP. For purposes of clause (5), the “maximum fixed redemption or repurchase
price” of any Disqualified Equity Interests that do not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Equity Interests as if such Disqualified Equity Interests were redeemed on
any date on which an amount of Indebtedness outstanding shall be required to be determined pursuant to this Indenture. 
 

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“Indenture” means this Indenture as amended, restated or supplemented from time to time. 
 
“Independent Director” means a director of the Parent who 
 
(1) is independent with respect to the transaction at issue; 
 
(2) does not have any material financial
interest in the Parent or any of its Affiliates (other than as a result of holding securities of the Parent); and 
 
(3) has not and whose Affiliates or affiliated firm has not, at any time during the twelve months prior to the taking of
any action hereunder, directly or indirectly, received, or entered into any understanding or agreement to receive, compensation, payment or other benefit, of any type or form, from the Parent or any of its Affiliates, other than customary
directors’ fees and indemnity and insurance arrangements for serving on the Board of Directors of the Parent or any Affiliate and reimbursement of out-of-pocket expenses for attendance at the Parent’s or Affiliate’s board and board
committee meetings. 
 
“Independent
Financial Advisor” means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Parent’s Board of Directors, qualified to perform the task for which it has been
engaged and disinterested and independent with respect to the Parent and its Affiliates; provided,however, that the prior rendering of service to the Parent or an Affiliate of the Parent shall not, by itself, disqualify the advisor.

 
“Intangible Assets” means, with
respect to any Person, all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, write-ups of assets over their carrying value (other than write-ups which occurred
prior to the Issue Date and other than, in connection with the acquisition of an asset, the write-up of the value of such asset to its Fair Market Value in accordance with GAAP on the date of acquisition) and all other items which would be treated
as intangibles on the consolidated balance sheet of such Person prepared in accordance with GAAP. 
 
“Interest Payment Dates” means each April 1 and October 1, commencing October 1, 2003. 
 
“Investments” of any Person means, without
duplication: 
 
(1) all direct or
indirect investments by such Person in any other Person in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;

 

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(2) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Equity Interests or other securities of any other Person; 
 
(3) all other items that would be classified as investments on a balance sheet of such Person
prepared in accordance with GAAP; and 
 
(4) the Designation of any Subsidiary as an Unrestricted Subsidiary. 
 
Except as otherwise expressly specified in this definition, the amount of any Investment (other than an Investment made in cash) shall be the Fair Market Value thereof on the date such Investment is made. The amount of any
Investment pursuant to clause (4) shall be the Designation Amount determined in accordance with Section 4.15. If the Parent or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Parent shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair
Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary not sold or disposed of, which amount shall be determined by the Board of Directors of the Parent. Notwithstanding the foregoing, redemptions of Equity
Interests of the Parent shall be deemed not to be Investments. 
 
“Issue Date” means March 17, 2003, the date on which the Notes are originally issued. 
 
“Issuer” means the party named as such in the first paragraph of this Indenture until a successor replaces such party
pursuant to Article Five and thereafter means the successor. 
 
“Joint Venture” means a corporation, limited liability company, partnership or other entity engaged in a Permitted Business (other than an entity constituting a Subsidiary of the Parent) in which the Parent or any of
its Restricted Subsidiaries owns, directly or indirectly, at least 10% of the Equity Interests. 
 
“Lien” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other
encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, and any lease in the nature thereof, any
option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction (other than cautionary filings in respect of operating leases).

 

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“Moody’s” means Moody’s Investors Service, Inc., and its successors; provided, that any reference to a particular rating by Moody’s shall be construed to apply to the corresponding rating of any
successor. 
 
“Net Available
Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents, net of 
 
(1) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel, accountants and
investment banks) of such Asset Sale; 
 
(2) provisions for taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements); 
 
(3) amounts required to be paid to any Person (other than the Parent or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale or having a Lien thereon; 
 
(4) payments of unassumed liabilities (not constituting Indebtedness) relating to the assets sold at the time of, or
within 30 days after the date of, such Asset Sale; and 
 
(5) appropriate amounts to be provided by the Parent or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the
Parent or any Restricted Subsidiary, as the case may be, after such Asset Sale, including pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as reflected in an Officers’ Certificate of the Parent delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves
shall constitute Net Available Proceeds. 
 
“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person for which (1) the sole legal recourse for collection of principal and interest on such Indebtedness is against the specific
property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 90 days after the acquisition of such property and (2) no
other assets of such Person may be realized upon in collection of principal or interest on such Indebtedness. 
 
“Notes” means the 10 3/4% Senior Notes due 2013 issued by the Issuer, as amended from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture. 
 

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“Obligation” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness. 
 
“Offer” has the meaning set forth in the
definition of “Offer to Purchase.” 
 
“Offer Expiration Date” has the meaning set forth in the definition of “Offer to Purchase.” 
 
“Offer to Purchase” means a written offer (the “Offer”) sent by or on behalf of the Issuer by
first-class mail, postage prepaid, to each Holder at its address appearing in the register for the Notes on the date of the Offer offering to purchase up to the principal amount of Notes specified in such Offer at the purchase price specified in
such Offer (as determined pursuant to this Indenture). Unless otherwise required by applicable law, the Offer shall specify an expiration date (the “Offer Expiration Date”) of the Offer to Purchase, which shall be not less than 30
Business Days nor more than 60 days after the date of such Offer, and a settlement date (the “Purchase Date”) for purchase of Notes to occur no later than three Business Days after the Offer Expiration Date. The Offer shall contain
all the information required by applicable law to be included therein. The Offer shall also contain information concerning the business of the Parent and its Subsidiaries which the Issuer in good faith believes will enable such Holders to make an
informed decision with respect to the Offer to Purchase. Such information shall include, at a minimum, (i) the most recent annual and quarterly financial statements and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” contained in the document required to be delivered to Holders pursuant to Section 4.02 (which requirements may be satisfied by delivery of such documents together with the Offer), (ii) a description of material
developments in the Issuer’s business subsequent to the date of the latest of such financial statements referred to in clause (i) (including a description of the events requiring the Issuer to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and the events requiring the Issuer to make the Offer to Purchase and (iv) any other information required by applicable law to be included therein. The Offer shall contain
all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also state: 
 
(1) the Section of this Indenture pursuant to which the Offer to Purchase is being made; 
 
(2) the Offer Expiration Date and the
Purchase Date; 
 
(3) the
aggregate principal amount of the outstanding Notes offered to be purchased by the Issuer pursuant to the Offer to Purchase (including, if less than 100%, the manner by which such amount has been determined pursuant to the Section of this Indenture
requiring the Offer to Purchase) (the “Purchase Amount”); 
 

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(4) the purchase price to be paid by the Issuer for each $1,000 aggregate principal amount of Notes accepted for payment (the “Purchase Price”); 
 
(5) that the Holder may tender all or any portion of the Notes registered in the name of such
Holder and that any portion of a Note tendered must be tendered in an integral multiple of $1,000 principal amount; 
 
(6) the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase; 
 
(7) that interest on any Note not tendered or
tendered but not purchased by the Issuer pursuant to the Offer to Purchase will continue to accrue; 
 
(8) that on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment
pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date; 
 
(9) that each Holder electing to tender all or any portion of a Note pursuant to the Offer to Purchase will be required to
surrender such Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, at the place or places specified in the Offer prior to the close of business on the Offer Expiration Date (such Note
being, if the Issuer so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer duly executed by, the Holder thereof or its attorney duly authorized in writing); 
 
(10) that Holders will be entitled to
withdraw all or any portion of Notes tendered if the Issuer receives, not later than the close of business on the fifth Business Day preceding the Offer Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note the Holder tendered, the certificate number of the Note the holder tendered and a statement that such Holder is withdrawing all or a portion of its tender; 
 
(11) that (a) if Notes in an aggregate
principal amount less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Issuer shall purchase all such Notes and (b) if Notes in an aggregate principal amount in excess of the Purchase
Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Issuer shall purchase Notes having an aggregate principal amount equal to the Purchase Amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only Notes in denominations of $1,000 principal amount or integral multiples thereof shall be purchased); and 
 
(12) that in the case of any Holder whose Note is purchased only in part, the Issuer shall execute and deliver to the
Holder of such Note without service charge, 
 

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a new Note or
Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Note so tendered. 
 
An Offer to Purchase shall be governed by and effected in accordance with the provisions above pertaining to
any Offer. 
 
On or before the Purchase Date, the
Issuer shall (i) accept for payment Notes or portions thereof tendered and not withdrawn pursuant to the Offer, (ii) deposit with the Trustee U.S. Dollars sufficient to pay the Purchase Price, plus accrued interest, if any, of all Notes to be
purchased and (iii) deliver to the Trustee Notes so accepted together with an Officers’ Certificate stating the Notes or portions thereof being purchased by the Issuer. The Trustee shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the Purchase Price, plus accrued interest, if any, thereon. 
 
“Officer” of any Person means any of the following of such Person: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any
Vice President, the Treasurer or the Secretary. 
 
“Officers’ Certificate” of any Person means a certificate signed by two Officers of such Person. 
 
“Opinion of Counsel” means a written opinion reasonably satisfactory in form and substance to the Trustee from legal
counsel, which counsel is reasonably acceptable to the Trustee, stating the matters required by Section 12.05 and delivered to the Trustee. 
 
“Parent” means William Lyon Homes, a Delaware corporation. 
 
“Pari Passu Indebtedness” means any Indebtedness of the Issuer or any Guarantor that ranks
pari passu as to payment with the Notes or the Note Guarantee of such Guarantor, as applicable. 
 
“Permitted Business” means the businesses engaged in by the Parent and its Subsidiaries on the Issue Date as described in the Prospectus and businesses that are reasonably related
thereto or reasonable extensions thereof. 
 
“Permitted Holders” means General William Lyon, his wife, his lineal descendants and his other close family members, any corporation, limited liability company or partnership in which he has voting control and is the
direct and beneficial owner of a majority of the Equity Interests and any trust for the benefit of him, his wife, his lineal descendants or his other close family members. 
 
 

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“Permitted Investment” means: 
 
(1) Investments by the Parent or any Restricted Subsidiary in (a) the Issuer or any Guarantor or (b) in any Person that is or will become immediately after such Investment a Guarantor or that will merge or consolidate into
the Issuer or a Guarantor; 
 
(2)
Investments in the Parent by any Restricted Subsidiary; 
 
(3) loans and advances to directors, employees and officers of the Parent and the Restricted Subsidiaries for bona fide business purposes and to purchase Equity Interests of the Parent not in excess of $2.0 million at any
one time outstanding; 
 
(4)
Hedging Obligations incurred pursuant to clause (4) of the second paragraph of Section 4.06; 
 
(5) Cash Equivalents; 
 
(6) receivables owing to the Parent or any Restricted Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Parent or any such Restricted Subsidiary deems reasonable under the
circumstances; 
 
(7) Investments
in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; 
 
(8) Investments made by the Parent or any
Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.09; 
 
(9) lease, utility and other similar deposits in the ordinary course of 
 
(10) Investments made by the Parent or a
Restricted Subsidiary for consideration consisting only of Qualified Equity Interests; 
 
(11) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing
to the Parent or any Restricted Subsidiary or in satisfaction of judgments; 
 
(12) Investments in existence on the Issue Date; 
 

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(13) Investments (with each Investment being valued as of the date made and without regard to subsequent changes in value) made by the Parent or any Restricted Subsidiary in Joint Ventures, Consolidated Joint Ventures, Restricted
Joint Ventures or in Unrestricted Subsidiaries in an aggregate amount at any one time outstanding not to exceed the sum of (x) 15% of the Parent’s Consolidated Tangible Net Worth at December 31, 2002 plus (y) in the case of the disposition or
repayment of or return on any Investment in a Joint Venture, Consolidated Joint Venture or Unrestricted Subsidiary which Investment was in existence on December 31, 2002, an amount equal to the return of capital after December 31, 2002 with respect
to such Investment (to the extent not included in the computation of Consolidated Net Income), less the cost of the disposition of such Investment and net of taxes; 
 
(14) completion guarantees entered into in the ordinary course of business; 
 
(15) the Designation of a Subsidiary as an
Unrestricted Subsidiary in accordance with the fourth paragraph of Section 4.15; and 
 
(16) other Investments in an aggregate amount not to exceed $5.0 million at any one time outstanding (with each Investment
being valued as of the date made and without regard to subsequent changes in value). 
 
The amount of Investments outstanding at any time pursuant to clause (16) above shall be deemed to be reduced: 
 
(a) upon the disposition or repayment of or return on any Investment made pursuant to clause (16) above, by an amount
equal to the return of capital with respect to such Investment to the Parent or any Restricted Subsidiary (to the extent not included in the computation of Consolidated Net Income), less the cost of the disposition of such Investment and net of
taxes; and 
 
(b) upon a
Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair Market Value of the Parent’s proportionate interest in such Subsidiary immediately following such Redesignation, and (y)
the aggregate amount of Investments in such Subsidiary that increased (and did not previously decrease) the amount of Investments outstanding pursuant to clause (16) above. 
 
“Permitted Liens” means the following types of Liens: 
 
(1) (a) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business and (b) Liens for taxes, assessments or governmental charges or claims, in either case, for sums
not yet delinquent or being con 
 

-24- 








 
tested in
good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; 
 
(2) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money); 
 
(3) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such inventory or other goods; 
 
(4) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents, goods
covered thereby and other assets relating to such letters of credit and products and proceeds thereof; 
 
(5) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty
requirements of the Parent or any Restricted Subsidiary, including rights of offset and setoff; 
 
(6) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash
Equivalents on deposit in one or more accounts maintained by the Parent or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts
owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly)
the repayment of any Indebtedness; 
 
(7) leases or subleases, licenses or sublicenses, (or any Liens related thereto) granted to others that do not materially interfere with the ordinary course of business of the Parent or any Restricted Subsidiary; 
 
(8) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; 
 
(9) Liens securing all of the Notes and Liens securing any Note Guarantee; 
 
(10) Liens in favor of the Trustee under and as permitted by this Indenture; 
 

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(11) Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date; 
 
(12) Liens in favor of the Issuer or a Guarantor; 
 
(13) Liens securing Indebtedness under the Credit Facilities incurred pursuant to clause (1)
of Section 4.06; 
 
(14) without
limiting any other clause in this definition of “Permitted Liens,” Liens securing Indebtedness of the Parent or any Restricted Subsidiary permitted to be incurred under this Indenture; provided, that the aggregate amount of all
Consolidated Indebtedness of the Parent and the Restricted Subsidiaries secured by Liens (including all Indebtedness permitted to be secured by the other provisions of this definition, but excluding Non-Recourse Indebtedness) shall not exceed 30% of
Consolidated Tangible Assets at any one time outstanding (after giving effect to the incurrence of such Indebtedness and the use of the proceeds thereof); 
 
(15) Liens securing Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary permitted to be incurred under
this Indenture; provided, that such Liens apply only to (a) the property financed out of the net proceeds of such Non-Recourse Indebtedness within 90 days after the incurrence of such Non-Recourse Indebtedness and (b) Directly Related Assets;

 
(16) Liens securing Purchase
Money Indebtedness permitted to be incurred under this Indenture; provided that such Liens apply only to (a) the property acquired, constructed or improved with the proceeds of such Purchase Money Indebtedness within 90 days after the
incurrence of such Purchase Money Indebtedness and (b) Directly Related Assets; 
 
(17) Liens securing Acquired Indebtedness permitted to be incurred under this Indenture; provided that the Liens do not extend to assets not subject to such Lien at the time of acquisition
(other than Directed Related Assets) and are no more favorable to the lienholders than those securing such Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Parent or a Restricted Subsidiary; 
 
(18) Liens on assets of a Person existing at
the time such Person is acquired or merged with or into or consolidated with the Parent or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof); 
 
(19) Liens to secure Attributable Indebtedness permitted to be incurred under this Indenture;
provided that any such Lien shall not extend to or cover any assets of the Parent or any Restricted Subsidiary other than (a) the assets which are the 
 
 

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subject of
the Sale and Leaseback Transaction in which the Attributable Indebtedness is incurred and (b) Directly Related Assets; 
 
(20) Liens securing Consolidated Joint Venture Indebtedness permitted to be incurred under this Indenture; provided
that, with respect to Indebtedness of any particular Consolidated Joint Venture, such Liens do not extend to assets other than those of the Consolidated Joint Venture; 
 
(21) Liens securing Permitted Restricted Joint Venture Indebtedness permitted to be incurred
under this Indenture; provided that, with respect to Indebtedness of any particular Restricted Joint Venture, such Liens do not extend to assets other than those of the Restricted Joint Venture; 
 
(22) Liens to secure Refinancing Indebtedness
which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; provided that in each case such Liens do not
extend to any additional assets (other than Directly Related Assets); 
 
(23) attachment or judgment Liens not giving rise to a Default and which are being contested in good faith by appropriate proceedings; 
 
(24) easements, rights-of-way, restrictions and other similar charges or encumbrances not
materially interfering with the ordinary course of business of the Parent and its Subsidiaries; 
 
(25) zoning restrictions, licenses, restrictions on the use of real property or minor irregularities in title thereto,
which do not materially impair the use of such real property in the ordinary course of business of the Parent and its Subsidiaries or the value of such real property for the purpose of such business; 
 
(26) Liens on Equity Interests in an
Unrestricted Subsidiary to the extent that such Liens secure Indebtedness of such Unrestricted Subsidiary owing to lenders who have also been granted Liens on assets of such Unrestricted Subsidiary to secure such Indebtedness; and 
 
(27) any option, contract or other agreement
to sell an asset; provided such sale is not otherwise prohibited under this Indenture. 
 
“Permitted Restricted Joint Venture Indebtedness” means Indebtedness of a Restricted Joint Venture incurred pursuant to clause (1) of Section 4.06. 
 

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“Permitted Unrestricted Subsidiary Debt” means Indebtedness of an Unrestricted Subsidiary: 
 
(1) as to which neither the Parent nor any Restricted Subsidiary (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender, other than, in the case of clause (a) or (b), obligations of the Parent or any
Restricted Subsidiary arising as a result of being the general partner of such Unrestricted Subsidiary to the extent such obligations do not constitute Indebtedness of the Parent or such Restricted Subsidiary in accordance with the definition of
“Indebtedness”; and 
 
(2) as to which the lenders have been notified in writing that they will not have any recourse to the Equity Interests or assets of the Parent or any Restricted Subsidiary. 
 
“Person” means any individual, corporation, partnership, limited liability company, joint
venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. 
 
“Physical Notes” means certificated Notes in
registered form in substantially the form set forth in Exhibit A. 
 
“Plan of Liquidation” with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in
phases or otherwise): (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (2) the distribution of all or substantially all
of the proceeds of such sale, lease, conveyance or other disposition of all or substantially all of the remaining assets of such Person to creditors and holders of Equity Interests of such Person. 
 
“Preferred Stock” means, with respect to any
Person, any and all preferred or preference stock or other equity interests (however designated) of such Person whether now outstanding or issued after the Issue Date. 
 
“principal” means, with respect to the Notes, the principal of, and premium, if any, on the
Notes. 
 
“Prospectus” means the
Prospectus dated March 12, 2003, pursuant to which the Notes were offered. 
 

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“Purchase Amount” has the meaning set forth in the definition of “Offer to Purchase.” 
 
“Purchase Date” has the meaning set forth in the definition of “Offer to Purchase.” 
 
“Purchase Money Indebtedness” means
Indebtedness, including Capitalized Lease Obligations, of the Parent or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price of property, plant or equipment used in the business of the Parent or any
Restricted Subsidiary or the cost of installation, construction or improvement thereof; provided, however, that (1) the amount of such Indebtedness shall not exceed such purchase price or cost (including financing costs), (2) such
Indebtedness shall not be secured by any asset other than the specified asset being financed or, in the case of real property or fixtures, including additions and improvements, the real property to which such asset is attached and Directly Related
Assets and (3) such Indebtedness shall be incurred within 90 days after such acquisition of such asset by the Parent or such Restricted Subsidiary or such installation, construction or improvement. 
 
“Purchase Price” has the meaning set forth in
the definition of “Offer to Purchase.” 
 
“Qualified Equity Interests” means Equity Interests of the Parent other than Disqualified Equity Interests; provided that such Equity Interests shall not be deemed Qualified Equity Interests to the extent sold
or owed to a Subsidiary of the Parent or financed, directly or indirectly, using funds (1) borrowed from the Parent or any Subsidiary of the Parent until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced
by the Parent or any Subsidiary of the Parent (including, without limitation, in respect of any employee stock ownership or benefit plan). 
 
“Qualified Equity Offering” means the issuance and sale of Qualified Equity Interests; provided, however, that
cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any Notes to be redeemed are received by the Issuer as a capital contribution immediately prior to such redemption. 
 
“Ratio Exception” has the meaning set forth
in the proviso in the first paragraph of Section 4.06. 
 
“redeem” means to redeem, repurchase, purchase, defease, retire, discharge or otherwise acquire or retire for value; and “redemption” shall have a correlative meaning. 
 
“Redemption Date” when used with respect to
any Note to be redeemed means the date fixed for such redemption pursuant to the terms of the Notes. 
 
 

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“Redesignation” has the meaning given to such term in Section 4.15. 
 
“refinance” means to refinance, repay, prepay, replace, renew or refund. 
 
“Refinancing Indebtedness” means Indebtedness
of the Parent or a Restricted Subsidiary issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to redeem or refinance in whole or in part, or constituting an amendment of, any
Indebtedness of the Parent or any Restricted Subsidiary (the “Refinanced Indebtedness”) in a principal amount not in excess of the principal amount of the Refinanced Indebtedness so repaid or amended (plus the amount of any premium
paid and the amount of reasonable expenses incurred by the Parent or any Restricted Subsidiary in connection with such repayment or amendment) (or, if such Refinancing Indebtedness refinances Indebtedness under a revolving credit facility or other
agreement providing a commitment for subsequent borrowings, with a maximum commitment not to exceed the maximum commitment under such revolving credit facility or other agreement); provided that: 
 
(1) if the Refinanced Indebtedness was
subordinated to or pari passu with the Notes or the Note Guarantees, as the case may be, then such Refinancing Indebtedness, by its terms, is expressly pari passu with (in the case of Refinanced Indebtedness that was pari passu
with) or subordinate in right of payment to (in the case of Refinanced Indebtedness that was subordinated to) the Notes or the Note Guarantees, as the case may be, at least to the same extent as the Refinanced Indebtedness; 
 
(2) the Refinancing Indebtedness is scheduled
to mature either (a) no earlier than the Refinanced Indebtedness being repaid or amended or (b) after the maturity date of the Notes; 
 
(3) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of
the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is
scheduled to mature on or prior to the maturity date of the Notes; and 
 
(4) the Refinancing Indebtedness is secured only to the extent, if at all, and by the assets, that the Refinanced Indebtedness being repaid, extended or amended is secured. 
 
“Responsible Officer” when used with respect
to the Trustee, means an officer or assistant officer assigned to the corporate trust department of the Trustee (or any successor group of the Trustee) with direct responsibility for the administration of this Indenture and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. 
 

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“Restricted Joint Venture” means a partnership formed after the Issue Date which, at the time of its formation, constituted a Joint Venture (whether or not it subsequently becomes a Restricted Subsidiary) and of
which the Issuer or any Guarantor is a general partner, to the extent that (i) the Indebtedness of such partnership is secured by assets whose Fair Market Value on the date of determination exceed the amount of such Indebtedness and (ii) the general
partner has not otherwise guaranteed or assumed such Indebtedness. 
 
“Restricted Payment” means any of the following: 
 
(1) the declaration or payment of any dividend or any other distribution on Equity Interests of the Parent or any
Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Parent or any Restricted Subsidiary, including, without limitation, any payment in connection with any merger or
consolidation involving the Parent or the Issuer, but excluding (a) dividends or distributions payable solely in Qualified Equity Interests and (b) in the case of Restricted Subsidiaries, dividends or distributions payable to the Parent or to a
Restricted Subsidiary and pro rata dividends or distributions payable to minority stockholders of any Restricted Subsidiary; 
 
(2) the redemption of any Equity Interests of the Parent or any Restricted Subsidiary, including, without limitation, any
payment in connection with any merger or consolidation involving the Parent or the Issuer, but excluding any such Equity Interests held by the Parent or any Restricted Subsidiary; 
 
(3) any Investment other than a Permitted Investment; or 
 
(4) any redemption prior to the scheduled
maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness. 
 
“Restricted Payments Basket” has the meaning given to such term in the first paragraph of Section 4.08. 
 
“Restricted Subsidiary” means any Subsidiary
of the Parent other than an Unrestricted Subsidiary. 
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors; provided, that any reference to a particular rating by S&P shall be construed
to apply to the corresponding rating of any successor. 
 
“Sale and Leaseback Transaction” means, with respect to any Person, an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the
leasing by such Person of any asset of such Person 
 

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which has been or is being sold or transferred by such Person to such lender or investor or to any Person
to whom funds have been or are to be advanced by such lender or investor on the security of such asset. 
 
“SEC” means the U.S. Securities and Exchange Commission. 
 
“Secretary’s Certificate” means a certificate signed by the Secretary of the Parent.

 
“Securities Act” means the U.S.
Securities Act of 1933, as amended. 
 
“Significant Subsidiary” means (1) any Restricted Subsidiary (other than the Issuer) that would be a “significant subsidiary” as defined in Regulation S-X promulgated pursuant to the Securities Act as such
Regulation is in effect on the Issue Date and (2) any Restricted Subsidiary (other than the Issuer) that, when aggregated with all other Restricted Subsidiaries (other than the Issuer) that are not otherwise Significant Subsidiaries and as to which
any event described in clause (7) or (8) of Section 6.01 has occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of this definition. 
 
“Subordinated Indebtedness” means Indebtedness of the Issuer or any Guarantor that is
subordinated in right of payment to the Notes or the Note Guarantees, respectively. 
 
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity that is or is required to be consolidated
in the consolidated financial statements of such Person in accordance with GAAP. Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Parent. 
 
“Subsidiary Guarantor” means any Guarantor other than the Parent. 
 
“Trust Indenture Act” or
“TIA” means the Trust Indenture Act of 1939, as amended. 
 
“Trustee” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor. 
 
“Unit” means a residence, whether single or
part of a multifamily building, whether completed or under construction, held by the Parent, any Restricted Subsidiary (other than Consolidated Joint Ventures) or any Restricted Joint Venture for sale in the ordinary course of business.

 
 

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“Unrestricted Subsidiary” means (1) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Parent in accordance with Section 4.15 and (2) any Subsidiary of an Unrestricted Subsidiary. 
 
“U.S. Government Obligations” means direct non-callable obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged. 
 
“Voting Stock” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the
holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

 
“Weighted Average Life to
Maturity” when applied to any Indebtedness at any date, means the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at final maturity, in respect thereof by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (2) the then
outstanding principal amount of such Indebtedness. 
 
“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary of which 100% of the Equity Interests (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due
to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) are owned directly by the Parent or through one or more Wholly-Owned Restricted Subsidiaries. 
 
SECTION 1.02 Other Definitions. 
 
The definitions of the following terms may be found in the
sections indicated as follows: 
 

	 Term

	    	 Defined in Section

	 
	 “Affiliate Transaction”
	    	 4.10
	  

	 “Agent Members”
	    	 2.16
	 (a)

	 “Change of Control Date”
	    	 4.20
	  

	 “Change of Control Offer”
	    	 4.20
	  

	 “Change of Control Payment Date”
	    	 4.20
	  

	 “Change of Control Purchase Price”
	    	 4.20
	  

	 “Covenant Defeasance”
	    	 9.03
	  

	 “Deficiency Date”
	    	 4.16
	  

	 “Designation”
	    	 4.15
	  


 

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	 Term

	    	 Defined in Section

	 
	 “Designation Amount”
	    	 4.15
	  

	 “Events of Default”
	    	 6.01
	  

	 “Excess Proceeds”
	    	 4.09
	  

	 “Global Notes”
	    	 2.16
	 (a)

	 “Legal Defeasance”
	    	 9.02
	  

	 “Minimum Tangible Net Worth”
	    	 4.16
	  

	 “Mortgage Subsidiary”
	    	 4.06
	  

	 “Net Proceeds Deficiency”
	    	 4.09
	  

	 “Net Proceeds Offer”
	    	 4.09
	  

	 “Net Worth Offer”
	    	 4.16
	  

	 “Net Worth Offer Amount
	    	 4.16
	  

	 “Offered Price”
	    	 4.09
	  

	 “Pari Passu Indebtedness Price
	    	 4.09
	  

	 “Paying Agent”
	    	 2.04
	  

	 “Payment Amount”
	    	 4.09
	  

	 “Permitted Indebtedness”
	    	 4.06
	  

	 “Ratio Exception”
	    	 4.06
	  

	 “Redesignation”
	    	 4.15
	  

	 “Registrar”
	    	 2.04
	  

	 “Successor”
	    	 5.01
	  


 
SECTION 1.03
Incorporation by Reference of Trust Indenture Act. 
 
Whenever this Indenture refers to a provision of the TIA, the portion of such provision required to be incorporated herein in order for this Indenture to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the following meanings: 
 
“indenture securities” means the Notes. 
 
“indenture securityholder” means a Holder or Noteholder. 
 
“indenture to be qualified”
means this Indenture. 
 
“indenture trustee” or “institutional trustee” means the Trustee. 
 
“obligor on the indenture securities” means the Issuer, the Guarantors or any other obligor on the Notes.

 
All other terms used in this Indenture that are
defined by the TIA, defined in the TIA by reference to another statute or defined by SEC rule have the meanings therein assigned to them. 
 
 

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SECTION 1.04 Rules of Construction. 
 
Unless the context otherwise requires: 
 
(1) a term has the meaning assigned to it herein, whether defined expressly or by reference;

 
(2) “or” is not
exclusive; 
 
(3) words in the
singular include the plural, and in the plural include the singular; 
 
(4) words used herein implying any gender shall apply to both genders; 
 
(5) “herein”, “hereof” and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other Subsection; 
 
(6) unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statements of the Issuer; and 
 
(7) “$,” “U.S. Dollars” and “United States Dollars” each refer
to United States dollars, or such other money of the United States that at the time of payment is legal tender for payment of public and private debts. 
 
ARTICLE TWO 
 
THE NOTES 
 
SECTION 2.01. Amount of Notes. 
 
The Trustee shall authenticate (i) Notes for original issue on the Issue Date in the aggregate principal amount not to exceed $250,000,000
and (ii) subject to Section 4.06, Additional Notes in the aggregate principal amount not to exceed $150,000,000, upon a written order of the Issuer in the form of an Officers’ Certificate of the Issuer. The Officers’ Certificate shall
specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated. The aggregate principal amount of Notes outstanding at any time may not exceed $400,000,000, except as provided in Sections 2.08 and 2.09.

 
Upon receipt of a written order of the Issuer in
the form of an Officers’ Certificate, the Trustee shall authenticate Notes in substitution for Notes originally issued to reflect any name change of the Issuer. Any Additional Notes shall be part of the same issue as the 
 

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Notes being issued on the date hereof and will vote on all matters as one class with the Notes being
issued on the date hereof, including, without limitation, waivers, amendments, redemptions and Offers to Purchase. For the purposes of this Indenture, except for Section 4.06, references to the Notes include Additional Notes, if any. 
 
SECTION 2.02. Form and Dating. 
 
The Notes and the Trustee’s certificate of authentication
with respect thereto shall be substantially in the form set forth in Exhibit A, which is incorporated in and forms a part of this Indenture. The Notes may have notations, legends or endorsements required by law, rule or usage to which the
Issuer is subject. Each Note shall be dated the date of its authentication. 
 
The terms and provisions contained in the Notes shall constitute, and are expressly made, a part of this Indenture and, to the extent applicable, the Issuer, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and provisions and agree to be bound thereby. 
 
The Notes may be presented for registration of transfer and exchange at the offices of the Registrar. 
 
SECTION 2.03. Execution and Authentication. 
 
Two Officers shall sign, or one Officer shall sign and one
Officer (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Issuer by manual or facsimile signature. 
 
If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. 
 
No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note
a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Issuer, and the Issuer shall deliver such Note to the Trustee for cancellation
as provided in Section 2.12, for all purposes of this Indenture such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. 
 
 

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The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to
authenticate the Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate the Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer. Each Paying Agent is designated as an authenticating agent for purposes of this Indenture. 
 
The Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. 
 
SECTION 2.04. Registrar and Paying Agent. 
 
The Issuer shall maintain an office or agency (which shall be located in the Borough of Manhattan in The City of New York, State of New York) where Notes may be presented for registration of transfer or for exchange (the
“Registrar”), and an office or agency where Notes may be presented for payment (the “Paying Agent”) and an office or agency where notices and demands to or upon the Issuer, if any, in respect of the Notes and this
Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer may have one or more additional Paying Agents. The term “Paying Agent” includes any additional Paying Agent. The
Issuer may change any Paying Agent or Registrar without prior notice to the Trustee or the Holders. Neither the Issuer nor any Affiliate thereof may act as Paying Agent. 
 
The Issuer shall enter into an appropriate agency agreement, which shall incorporate the provisions of the
TIA, with any Agent that is not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee of the name and address of any such Agent. If the Issuer fails
to maintain a Registrar or Paying Agent or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with Section 7.07. 
 
The Issuer initially appoints the Trustee as Registrar, Paying
Agent and Agent for service of notices and demands in connection with the Notes and this Indenture. 
 
SECTION 2.05. Paying Agent To Hold Money in Trust. 
 
Each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes (whether such money has been paid to it by the Issuer or any other obligor on the Notes or the Guarantors), and the Issuer and the Paying Agent shall notify the Trustee of any default by the Issuer
(or any other obligor on the Notes) in making any such payment. Money held in trust by the Paying Agent need not be segregated except as required by law and in no event shall the Paying Agent be liable for any interest on any money received

 

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by it hereunder. The Issuer at any time may require the Paying Agent to pay all money held by it to the
Trustee and account for any funds disbursed and the Trustee may at any time during the continuance of any Event of Default specified in Section 6.01 (1) or (2), upon written request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed. Upon making such payment, the Paying Agent shall have no further liability for the money delivered to the Trustee. 
 
SECTION 2.06. Holder Lists. 
 
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least five Business Days before each Interest Payment Date, and at
such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders. 
 
SECTION 2.07. Transfer and Exchange. 
 
Subject to Section 2.16, when Notes are presented to the Registrar with a request from the Holder of such
Notes to register a transfer or to exchange them for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer as requested. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Registrar, duly executed by the Holder thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuer shall issue and execute and the Trustee shall authenticate new Notes (and the Guarantors shall execute the guarantee thereon) evidencing such transfer or exchange at the Registrar’s request. No service charge
shall be made to the Holder for any registration of transfer or exchange. The Issuer may require from the Holder payment of a sum sufficient to cover any transfer taxes or other governmental charge that may be imposed in relation to a transfer or
exchange, but this provision shall not apply to any exchange pursuant to Section 2.11, 3.06, 4.09, 4.20 or 8.05 (in which events the Issuer shall be responsible for the payment of such taxes). The Registrar shall not be required to exchange or
register a transfer of any Note for a period of 15 days immediately preceding the mailing of notice of redemption of Notes to be redeemed or of any Note selected, called or being called for redemption except the unredeemed portion of any Note being
redeemed in part. 
 
Any Holder of the Global Note
shall, by acceptance of such Global Note, agree that transfers of the beneficial interests in such Global Note may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Global Note shall be required to be reflected in a book entry. 
 
 

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Each Holder of a Note agrees to indemnify the Issuer and the Trustee against any liability
that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of this Indenture and/or applicable U.S. Federal or state securities law. 
 
Except as expressly provided herein, neither the Trustee nor the Registrar shall have any duty to monitor the
Issuer’s compliance with or have any responsibility with respect to the Issuer’s compliance with any Federal or state securities laws. 
 
SECTION 2.08. Replacement Notes. 
 
If a mutilated Note is surrendered to the Registrar or the Trustee, or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note (and the Guarantors shall execute the guarantee thereon) if the Holder of such Note furnishes to the Issuer and the Trustee evidence
reasonably acceptable to them of the ownership and the destruction, loss or theft of such Note and if the requirements of Section 8-405 of the New York Uniform Commercial Code as in effect on the date of this Indenture are met. If required by the
Trustee or the Issuer, an indemnity bond shall be posted, sufficient in the judgment of both to protect the Issuer, the Guarantors, the Trustee or any Paying Agent from any loss that any of them may suffer if such Note is replaced. The Issuer may
charge such Holder for the Issuer’s reasonable out-of-pocket expenses (including, without limitation, attorneys’ fees and disbursements) in replacing such Note and the Trustee may charge the Issuer for the Trustee’s expenses
(including, without limitation, attorneys’ fees and disbursements) in replacing such Note. Every replacement Note shall constitute a contractual obligation of the Issuer. 
 
SECTION 2.09. Outstanding Notes. 
 
The Notes outstanding at any time are all Notes that have been authenticated by the Trustee except for (a)
those cancelled by it, (b) those delivered to it for cancellation, (c) to the extent set forth in Sections 9.01 and 9.02, on or after the date on which the conditions set forth in Section 9.01 or 9.02 have been satisfied, those Notes theretofore
authenticated and delivered by the Trustee hereunder and (d) those described in this Section 2.09 as not outstanding. Subject to Section 2.10, a Note does not cease to be outstanding because the Issuer or one of its Affiliates holds the Note.

 
If a Note is replaced pursuant to Section 2.08,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser in whose hands such Note is a legal, valid and binding obligation of the Issuer. 
 
If the Paying Agent holds, in its capacity as such, on any
maturity date, money sufficient to pay all accrued interest and principal with respect to the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the 
 

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terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on
them ceases to accrue. 
 
SECTION 2.10. Treasury Notes.

 
In determining whether the Holders of the
required principal amount of Notes have concurred in any declaration of acceleration or notice of default or direction, waiver or consent or any amendment, modification or other change to this Indenture, Notes owned by the Issuer or any other
Affiliate of the Issuer shall be disregarded as though they were not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes as to which a Responsible Officer of the Trustee has received an Officers’ Certificate stating that such Notes are so owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee established to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not the Issuer, a Guarantor, any other obligor on the Notes or any of
their respective Affiliates. 
 
SECTION 2.12. Temporary
Notes. 
 
Until definitive Notes are prepared
and ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary
Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as
definitive Notes. 
 
SECTION 2.12. Cancellation.

 
The Issuer at any time may deliver Notes to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall (subject to the record-retention requirements of the Exchange Act) destroy cancelled Notes. The Issuer may not reissue or resell, or issue new Notes to replace, Notes that the Issuer has
redeemed or paid, or that have been delivered to the Trustee for cancellation. 
 
SECTION 2.13. Defaulted Interest. 
 
If the Issuer defaults on a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent permitted by law) any interest payable on the defaulted interest, in accordance with the terms hereof, to the
Persons who are Holders on a subsequent 
 

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special record date, which date shall be at least five Business Days prior to the payment date. The Issuer
shall fix such special record date and payment date in a manner satisfactory to the Trustee. At least 10 days before such special record date, the Issuer shall mail to each Holder a notice that states the special record date, the payment date and
the amount of defaulted interest, and interest payable on defaulted interest, if any, to be paid. The Issuer may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Notes may be listed and, upon such notice as may be required by such exchange, if, after written notice given by the Issuer to the Trustee of the proposed payment pursuant to this sentence, such manner of payment
shall be deemed practicable by the Trustee. 
 
SECTION 2.14.
CUSIP Number. 
 
The Issuer in issuing the
Notes may use a “CUSIP” number, and if so, such CUSIP number shall be included in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuer shall promptly notify the Trustee of any such CUSIP number
used by the Issuer in connection with the issuance of the Notes and of any change in the CUSIP number. 
 
SECTION 2.15. Deposit of Moneys. 
 
Prior to 10:00 a.m., New York City time, on each Interest Payment Date and maturity date, the Issuer shall have deposited with the Paying Agent in immediately available funds money sufficient to make
cash payments, if any, due on such Interest Payment Date or maturity date, as the case may be, in a timely manner which permits the Trustee to remit payment to the Holders on such Interest Payment Date or maturity date, as the case may be. The
principal and interest on Global Notes shall be payable to the Depository or its nominee, as the case may be, as the sole registered owner and the sole holder of the Global Notes represented thereby. The principal and interest on Physical Notes
shall be payable, either in person or by mail, at the office of the Paying Agent. 
 
SECTION 2.16. Book-Entry Provisions for Global Notes. 
 
(a) The Notes issued on the Issue Date initially shall be represented by one or more notes in registered, global form without interest coupons (collectively, the “Global Notes”). The
Global Notes shall bear legends as set forth in Exhibit B. The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, in each case for credit to an account of an Agent Member and (ii)
be delivered to the Trustee as custodian for such Depository. Members of, or direct or indirect participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or 
 

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under the Global Notes, and the Depository may be treated by the Issuer, the Trustee and any agent of the
Issuer or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 
(b) Transfers of Global Notes shall be limited
to transfer in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures
of the Depository. In addition, a Global Note shall be exchangeable for Physical Notes if (i) the Depository (x) notifies the Issuer (and the Issuer notifies the Trustee) that it is unwilling or unable to continue as depository for such Global Note
and the Issuer thereupon fails to appoint a successor depository or (y) has ceased to be a clearing agency registered under the Exchange Act and the Issuer thereupon fails to appoint a successor depository, (ii) the Issuer, at its option, notifies
the Trustee in writing that it elects to cause the issuance of such Physical Notes or (iii) there shall have occurred and be continuing an Event of Default with respect to the Notes. In all cases, Physical Notes delivered in exchange for any Global
Note or beneficial interests therein shall be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depository (in accordance with its customary procedures). 
 
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners pursuant to paragraph (b), the Registrar and Depository shall (if one or more Physical Notes are to be issued) reflect on their respective books and records the date and a decrease
in the principal amount of the Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Issuer shall execute, and the Trustee shall upon receipt of a written order from the
Issuer authenticate and make available for delivery, one or more Physical Notes of like tenor and amount. 
 
(d) In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Issuer shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in writing in exchange for its beneficial interest in
the Global Notes, an equal aggregate principal amount of Physical Notes of authorized denominations. 
 
(e) Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in
another Global Note shall, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global 
 

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Note and, accordingly, shall thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it remains such an interest. 
 
(f) The Holder of any Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. 
 
SECTION 2.17. Computation of Interest. 
 
Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. 
 
ARTICLE THREE 
 
REDEMPTION 
 
SECTION 3.01. Election To Redeem; Notices to Trustee. 
 
If the Issuer elects to redeem Notes pursuant to paragraph 6
of the Notes, at least 45 days prior to the Redemption Date (unless a shorter notice shall be agreed to in writing by the Trustee) but not more than 65 days before the Redemption Date, the Issuer shall notify the Trustee in writing of the Redemption
Date, the principal amount of Notes to be redeemed and the redemption price, and deliver to the Trustee an Officers’ Certificate stating that such redemption will comply with the conditions contained in paragraph 6 of the Notes. Notice given to
the Trustee pursuant to this Section 3.01 may not be revoked after the time that notice is given to Holders pursuant to Section 3.03. 
 
SECTION 3.02. Selection by Trustee of Notes To Be Redeemed. 
 
In the event that less than all of the Notes are to be redeemed pursuant to a redemption made pursuant to
paragraph 6 of the Notes, selection of the Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then
listed on a national security exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part.
If a partial redemption is made pursuant to the second paragraph of paragraph 6 of the Notes, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to the procedures of the Depository), unless that method is otherwise prohibited. The Trustee shall promptly notify the Issuer of the Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to 
 

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be redeemed. The Trustee may select for redemption portions of the principal of the Notes that have
denominations larger than $1,000. For all purposes of this Indenture unless the context otherwise requires, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Issuer may
acquire Notes by means other than redemption, whether pursuant to an Issuer tender offer, open market purchase or otherwise provided such acquisition does not otherwise violate the other terms of this Indenture. 
 
SECTION 3.03. Notice of Redemption. 
 
At least 30 days, and no more than 60 days, before a
Redemption Date, the Issuer shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.04. 
 
The notice shall
identify the Notes to be redeemed (including the CUSIP numbers thereof) and shall state: 
 
(1) the Redemption Date; 
 
(2) the redemption price and the amount of premium and accrued interest to be paid; 
 
(3) if any Note is being redeemed in part,
the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued; 
 
(4) the name and address of the Paying Agent;

 
(5) that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption price; 
 
(6) that unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date; 
 
(7) the provision of paragraph 6 of the Notes, as the case may be, pursuant to which the Notes called for redemption are being redeemed; and 
 
(8) the aggregate principal amount of Notes that are being redeemed. 
 
 

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At the Issuer’s written request made at least five Business Days prior to the date on
which notice is to be given, the Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s sole expense. 
 
SECTION 3.04. Effect of Notice of Redemption. 
 
Once the notice of redemption described in Section 3.03 is mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued to the
Redemption Date, provided that if the Redemption Date is after a regular record date and on or prior to the Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant record
date, and provided, further, that if a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day.

 
SECTION 3.05. Deposit of Redemption Price. 
 
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Issuer shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of, including premium, if any, and accrued interest on all Notes to be redeemed on that date other than Notes
or portions thereof called for redemption on that date which have been delivered by the Issuer to the Trustee for cancellation. 
 
On and after any Redemption Date, if money sufficient to pay the redemption price of, including premium, if any, and accrued interest on
Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to accrue interest and the only right of the Holders of such Notes will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any Note surrendered for redemption shall not be so paid, interest will be paid, from the Redemption Date
until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case, at the rate and in the manner provided in the Notes. 
 
SECTION 3.06. Notes Redeemed in Part. 
 
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for the Holder thereof a new Note equal in principal amount to the unredeemed portion of the Note surrendered. 
 

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ARTICLE FOUR

 
COVENANTS 
 
SECTION 4.01. Payment of Notes. 
 
The Issuer shall pay the principal of and interest on the
Notes on the dates and in the manner provided in the Notes and this Indenture. An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money designated for and
sufficient to pay such installment. 
 
The Issuer
shall pay interest on overdue principal (including post-petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the rate specified in the Notes. 
 
SECTION 4.02. Reports to Holders. 
 
Whether or not required by the SEC, so long as any Notes are
outstanding, the Parent shall furnish to the Holders of Notes, within the time periods specified in the SEC’s rules and regulations (including any grace periods or extensions permitted by the SEC): 
 
(1) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Parent were required to file these Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and, with respect to the annual information only, a report on the annual financial statements by the Parent’s certified independent accountants; and 
 
(2) all current reports that would be required to be filed with the SEC on Form 8-K if the
Parent were required to file these reports. 
 
In
addition, whether or not required by the SEC, the Parent shall file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules
and regulations (unless the SEC will not accept the filing) and make the information available to securities analysts and prospective investors upon request. 
 
SECTION 4.03. Waiver of Stay, Extension or Usury Laws. 
 
Each of the Issuer and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or
plead (as a defense or otherwise) or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive any of the Issuer and the Guarantors 
 

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from paying all or any portion
of the principal of, premium, if any, and/or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that they
may lawfully do so) each of the Issuer and the Guarantors hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had been enacted. 
 
SECTION 4.04. Compliance Certificate. 
 
(a) The Issuer shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Issuer and its Subsidiaries
during such fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuer and the Guarantors have kept, observed, performed and fulfilled their obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Issuer and the Guarantors have kept, observed, performed and fulfilled each and every covenant contained in this Indenture and are not in
default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default shall have occurred, describing all such Defaults of which he or she may have knowledge and what action they are taking or propose to
take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has
occurred, a description of the event and what action the Issuer and the Guarantors is taking or propose to take with respect thereto. 
 
(b) The Issuer and the Guarantors shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default, an Officers’ Certificate specifying such Default and what action the Issuer and the Guarantors are taking or propose to take with respect thereto. 
 
(c) The Issuer’s fiscal year currently ends on December 31. The Issuer will provide written notice to
the Trustee of any change in its fiscal year. 
 
SECTION 4.05.
Taxes. 
 
The Issuer and the Guarantors
shall, and shall cause each of their Subsidiaries to, pay prior to delinquency all material taxes, assessments, and governmental levies except as contested in good faith and by appropriate proceedings. 
 

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SECTION 4.06. Limitations
on Additional Indebtedness. 
 
The Parent shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness) if no Default shall have
occurred and be continuing at the time of or as a consequence of the incurrence of the Indebtedness and if, after giving effect thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be at least 2.00 to 1.00 or (b) the ratio of
Consolidated Indebtedness to Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or (b), the “Ratio Exception”). 
 
Notwithstanding the above, so long as no Default shall have occurred and be continuing at the time of or as a consequence of the
incurrence of the following Indebtedness, each of the following shall be permitted (the “Permitted Indebtedness”): 
 
(1) Indebtedness of the Parent and any Restricted Subsidiary under the Credit Facilities and Indebtedness of Restricted
Joint Ventures in an aggregate amount at any time outstanding (whether incurred under the Ratio Exception or as Permitted Indebtedness) not to exceed the greater of (x) $215.0 million and (y) the amount of the Borrowing Base as of the date of such
incurrence; 
 
(2) the Notes and
the Note Guarantees issued on the Issue Date; 
 
(3) Indebtedness of the Parent and the Restricted Subsidiaries to the extent outstanding on the Issue Date (other than Indebtedness referred to in clauses (1) and (2) above, and after giving effect to the intended use of proceeds of
the Notes); 
 
(4) Indebtedness of
the Parent and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.06, and (b) the notional
principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate; 
 
(5) Indebtedness of the Parent owed to a Restricted Subsidiary and Indebtedness of any
Restricted Subsidiary owed to the Parent or any other Restricted Subsidiary; provided, however, that (a) any Indebtedness of the Parent or the Issuer owed to a Restricted Subsidiary is unsecured and subordinated, pursuant to a written
agreement, to the Parent or the Issuer’s obligations under this Indenture and the Notes and (b) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Parent or a
Restricted Subsidiary, such Restricted Subsidiary shall be deemed to have incurred Indebtedness not permitted by this clause (5); 
 

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(6) Indebtedness in respect of bid, performance or surety bonds issued for the account of the Parent or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Parent or any Restricted
Subsidiary with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed); 
 
(7) Purchase Money Indebtedness incurred by the Parent or any Restricted Subsidiary, in an
aggregate amount not to exceed at any time outstanding $15.0 million; 
 
(8) Non-Recourse Indebtedness of the Parent or any Restricted Subsidiary incurred for the acquisition, development and/or improvement of real property and secured by Liens only on such real property
and Directly Related Assets; 
 
(9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence; 
 
(10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

 
(11) Refinancing Indebtedness
with respect to Indebtedness incurred pursuant to the Ratio Exception, clause (2) or (3) above or this clause (11); 
 
(12) the guarantee by the Parent or any Restricted Subsidiary of Indebtedness (other than Permitted Restricted Joint
Venture Indebtedness and Indebtedness incurred pursuant to clause (8), (13) or (15) hereof or, in the case of the guarantee by a Restricted Subsidiary that is not a Guarantor, pursuant to the Ratio Exception) of a Restricted Subsidiary, in the case
of the Parent, or of the Parent or another Restricted Subsidiary, in the case of a Restricted Subsidiary, in either case, that was permitted to be incurred by another provision of this covenant; 
 
(13) Indebtedness of any Restricted
Subsidiary engaged primarily in the mortgage origination and lending business (a “Mortgage Subsidiary”) under warehouse lines of credit and repurchase agreements, and Indebtedness secured by mortgage loans and related assets of such
Restricted Subsidiary, in each case incurred in the ordinary course of such business; provided that the only legal recourse for collection of obligations owing on such Indebtedness is against such Restricted Subsidiary, any other Mortgage
Subsidiary and their respective assets; 
 

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(14) Indebtedness of the Parent or any Restricted Subsidiary in an
aggregate amount not to exceed $10.0 million at any time outstanding; and 
 
(15) Indebtedness of Consolidated Joint Ventures in an aggregate amount at any time outstanding not to exceed $115.0 million less the aggregate amount of liabilities that would constitute
Indebtedness of the Parent and the Restricted Subsidiaries but for clause (c) of the last paragraph of the definition of “Indebtedness” on the date of determination. 
 
For purposes of determining compliance with this Section 4.06, in the event that an item of Indebtedness
meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (15) above or is entitled to be incurred pursuant to the Ratio Exception, the Parent shall, in its sole discretion, classify such item
of Indebtedness and may divide and classify such Indebtedness in more than one of the types of Indebtedness described, except that (a) Indebtedness outstanding under the Credit Facilities on the Issue Date shall be deemed to have been incurred under
clause (1) above and (b) Indebtedness of Joint Ventures on the date they become Consolidated Joint Ventures shall be deemed to have been incurred under clause (15) above. 
 
SECTION 4.07. [Intentionally Omitted] 
 
SECTION4.08. Limitations on Restricted Payments. 
 
The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment: 
 
(1) a Default shall have occurred and be continuing or shall occur as a consequence thereof; 
 
(2) the Parent cannot incur $1.00 of additional Indebtedness pursuant to the Ratio Exception; or 
 
(3) the amount of such Restricted Payment,
when added to the aggregate amount of all other Restricted Payments made after the Issue Date (other than Restricted Payments made pursuant to clause (2), (3) or (5) of the next paragraph), exceeds the sum (the “Restricted Payments
Basket”) of (without duplication): 
 
(a) 50% of Consolidated Net Income for the period (taken as one accounting period) commencing on the first day of the first full fiscal quarter commencing after the Issue Date to and including the last day of the fiscal quarter ended
immediately prior to the date of such calculation for which consolidated financial statements are available (or, if such Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit), plus 
 

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(b) 100% of the aggregate net cash proceeds received by the Parent either (x) as contributions to the common equity of the Parent after the Issue Date or (y) from the issuance and sale of Qualified Equity Interests after the Issue
Date, other than to the extent any such proceeds are used to redeem Notes in accordance with paragraph 6(b) of the Notes, plus 
 
(c) the aggregate amount by which Indebtedness of the Parent or any Restricted Subsidiary is reduced on the Parent’s
balance sheet upon the conversion or exchange (other than by a Subsidiary of the Parent) of Indebtedness issued subsequent to the Issue Date into Qualified Equity Interests (less the amount of any cash, or the fair value of assets, distributed by
the Parent or any Restricted Subsidiary upon such conversion or exchange), plus 
 
(d) in the case of the disposition or repayment of or return on any Investment that was treated as a Restricted Payment
made after the Issue Date, an amount (to the extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) the return of capital with respect to such Investment and (ii) the amount of such Investment that was treated
as a Restricted Payment, in either case, less the cost of the disposition of such Investment and net of taxes, plus 
 
(e) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the lesser of (i) the Fair Market Value
of the Parent’s proportionate interest in such Subsidiary immediately following such Redesignation, and (ii) the aggregate amount of the Parent’s Investments in such Subsidiary to the extent such Investments reduced the amount available
for subsequent Restricted Payments under this clause (3) and were not previously repaid or otherwise reduced, plus 
 
(f) $5.0 million. 
 
The foregoing provisions will not prohibit: 
 
(1) the payment by the Parent or any Restricted Subsidiary of any dividend within 60 days after the date of declaration
thereof, if on the date of declaration the payment would have complied with the provisions of this Indenture; 
 
(2) so long as no Default shall have occurred and be continuing at the time of or as a consequence of such redemption, the
redemption of any Equity Interests of the Parent or any Restricted Subsidiary in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests; 
 

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(3) so long as no Default shall have occurred and be continuing at the time of or as a consequence of such redemption, the redemption of Subordinated Indebtedness of the Parent or any Restricted Subsidiary (a) in exchange for, or out
of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests or (b) in exchange for, or out of the proceeds of the substantially concurrent incurrence of, Refinancing Indebtedness permitted to be incurred under
Section 4.06 and the other terms of this Indenture; 
 
(4) so long as no Default shall have occurred and be continuing at the time of or as a consequence of such redemption, the redemption of Equity Interests of the Parent held by officers, directors or employees or former
officers, directors or employees (or their transferees, estates or beneficiaries under their estates), upon their death, disability, retirement, severance or termination of employment or service; provided that the aggregate cash consideration
paid for all such redemptions shall not exceed $2.0 million during any calendar year; or 
 
(5) repurchases of Equity Interests deemed to occur upon the exercise of stock options if the Equity Interests represents
a portion of the exercise price thereof; 
 
provided that no
issuance and sale of Qualified Equity Interests pursuant to clause (2) or (3) above shall increase the Restricted Payments Basket, except to the extent the proceeds thereof exceed the amounts used to effect the transactions described therein.

 
SECTION 4.09. Limitations on Asset Sales. 
 
The Parent shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Sale unless: 
 
(1) the Parent or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale; and 
 
(2) at least 75% of the total consideration
received in such Asset Sale or series of related Asset Sales consists of cash or Cash Equivalents. 
 
For purposes of clause (2), the following shall be deemed to be cash: 
 
(a) the amount (without duplication) of any Indebtedness (other than Subordinated
Indebtedness) of the Parent or such Restricted Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Parent or such Restricted Subsidiary, as the case may be, is unconditionally released by the
holder of such Indebtedness, 
 

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(b) the amount of any obligations received from such transferee that are within 60 days converted by the Parent or such Restricted Subsidiary to cash (to the extent of the cash actually so received), and 
 
(c) the Fair Market Value of any assets
(other than securities, unless such securities represent Equity Interests in an entity engaged solely in a Permitted Business, such entity becomes a Restricted Subsidiary and the Parent or a Restricted Subsidiary acquires voting and management
control of such entity) received by the Parent or any Restricted Subsidiary to be used by it in the Permitted Business. 
 
If at any time any non-cash consideration received by the Parent or any Restricted Subsidiary, as the case may be, in connection with any
Asset Sale is repaid or converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such repayment, conversion or disposition shall be deemed to constitute
the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this Section 4.09. 
 
If the Parent or any Restricted Subsidiary engages in an Asset Sale, the Parent or such Restricted Subsidiary shall, no later than 360
days following the consummation thereof, apply all or any of the Net Available Proceeds therefrom to: 
 
(1) repay any Indebtedness under the Credit Facilities and, in the case of any such Indebtedness under any revolving
credit facility, effect a permanent reduction in the availability of such revolving credit facility; 
 
(2) repay any Indebtedness which was secured by the assets sold in such Asset Sale; and/or 
 
(3) invest all or any part of the Net
Available Proceeds thereof in the purchase of assets (other than securities, unless such securities represent Equity Interests in an entity engaged solely in a Permitted Business, such entity becomes a Restricted Subsidiary and the Parent or a
Restricted Subsidiary acquires voting and management control of such entity) to be used by the Parent or any Restricted Subsidiary in the Permitted Business. 
 
The amount of Net Available Proceeds not applied or invested as provided in this paragraph will constitute “Excess
Proceeds.” 
 
When the aggregate amount of
Excess Proceeds equals or exceeds $10.0 million, the Issuer shall be required to make an Offer to Purchase from all Holders and, if applicable, redeem (or make an offer to do so) any Pari Passu Indebtedness of the Issuer the provisions of which
require the Issuer to redeem such Indebtedness with the proceeds from 
 

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any Asset Sales (or offer to do so), in an aggregate principal amount of Notes and such Pari Passu
Indebtedness equal to the amount of such Excess Proceeds as follows: 
 
(1) the Issuer shall (a) make an Offer to Purchase (a “Net Proceeds Offer”) to all Holders, and (b) redeem (or make an offer to do so) any such other Pari Passu Indebtedness, pro
rata in proportion to the respective principal amounts of the Notes and such other Indebtedness required to be redeemed, the maximum principal amount of Notes and Pari Passu Indebtedness that may be redeemed out of the amount (the
“Payment Amount”) of such Excess Proceeds; 
 
(2) the offer price for the Notes shall be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest
thereon, if any, to the date such Net Proceeds Offer is consummated (the “Offered Price”), and the redemption price for such Pari Passu Indebtedness (the “Pari Passu Indebtedness Price”) shall be as set forth in the
related documentation governing such Indebtedness; 
 
(3) if the aggregate Offered Price of Notes validly tendered and not withdrawn by Holders thereof exceeds the pro rata portion of the Payment Amount allocable to the Notes, Notes to be purchased shall be selected on a
pro rata basis; and 
 
(4)
upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero. 
 
To the extent that the sum of the aggregate Offered Price of
Notes tendered pursuant to a Net Proceeds Offer and the aggregate Pari Passu Indebtedness Price paid to the holders of such Pari Passu Indebtedness is less than the Payment Amount relating thereto (such shortfall constituting a “Net Proceeds
Deficiency”), the Issuer may use the Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the provisions of this Indenture. 
 
The Issuer shall comply with applicable tender offer rules, including the requirements of Rule 14e-1 under
the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.09, the
Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.09 by virtue of this compliance. 
 
SECTION 4.10. Limitations on Transactions with Affiliates. 
 
The Parent shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise 
 

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dispose of any of its assets to, or purchase any assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (an “Affiliate Transaction”), unless: 
 
(1) such Affiliate Transaction is on terms that are no less favorable to the Parent or the relevant Restricted Subsidiary
than those that may have been obtained in a comparable transaction at such time on an arm’s-length basis by the Parent or that Restricted Subsidiary from a Person that is not an Affiliate of the Parent or that Restricted Subsidiary; and

 
(2) the Parent delivers to the
Trustee: 
 
(a) with respect to
any Affiliate Transaction involving aggregate value expended or received by the Parent or any Restricted Subsidiary in excess of $2.0 million, an Officers’ Certificate of the Parent certifying that such Affiliate Transaction complies with
clause (1) above and a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by the Independent Directors approving such Affiliate Transaction; and 
 
(b) with respect to any Affiliate Transaction
involving aggregate value expended or received by the Parent or any Restricted Subsidiary of $10.0 million or more, the certificates described in the preceding clause (a) and (x) a written opinion as to the fairness of such Affiliate Transaction to
the Parent or such Restricted Subsidiary from a financial point of view or (y) a written appraisal supporting the value of such Affiliate Transaction, in either case, issued by an Independent Financial Advisor. 
 
The foregoing restrictions shall not apply to 
 
(1) transactions exclusively between or among
(a) the Parent and one or more Restricted Subsidiaries or (b) Restricted Subsidiaries; provided, in each case, that no Affiliate of the Parent (other than another Restricted Subsidiary) owns Equity Interests of any such Restricted Subsidiary;

 
(2) reasonable director,
officer, employee and consultant compensation (including bonuses) and other benefits (including retirement, health, stock and other benefit plans) and indemnification and insurance arrangements; 
 
(3) the allocation of employee services among
the Parent, its Subsidiaries and the Joint Ventures on a fair and equitable basis in the ordinary course of business; provided that, in the case of any such Subsidiary or Joint Venture, no officer, director or stockholder of the Parent
beneficially owns any Equity Interests in such Subsidiary 
 

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or Joint
Venture (other than indirectly through ownership of Equity Interests in the Parent); 
 
(4) loans and advances permitted by clause (3) of the definition of “Permitted Investments”; 
 
(5) any agreement as in effect as of the
Issue Date or any extension, amendment or modification thereto (so long as any such extension, amendment or modification satisfies the requirements set forth in clause (1) of the first paragraph of this Section 4.10) or any transaction contemplated
thereby; 
 
(6) Restricted
Payments which are made in accordance with Section 4.08 and Permitted Investments (other than any Permitted Investment made in accordance with clause (13) of the definition of “Permitted Investments” to the extent that such Permitted
Investment is in a Joint Venture or Unrestricted Subsidiary of which any officer, director or stockholder of the Parent beneficially owns any Equity Interests (other than indirectly through ownership of Equity Interests in the Parent));

 
(7) licensing of trademarks to,
and allocation of overhead, sales and marketing, travel and like expenses among, the Parent, its Subsidiaries and the Joint Ventures on a fair and equitable basis in the ordinary course of business; provided that, in the case of any such
Subsidiary or Joint Venture, no officer, director or stockholder of the Parent beneficially owns any Equity Interests in such Subsidiary or Joint Venture (other than indirectly through ownership of Equity Interests in the Parent); or 
 
(8) sales or other dispositions of Qualified
Equity Interests for cash by the Parent to an Affiliate. 
 
SECTION
4.11. Limitations on Liens. 
 
The Parent
shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or permit or suffer to exist any Lien of any nature whatsoever (other than Permitted Liens) against any assets of the Parent or any
Restricted Subsidiary (including Equity Interests of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom, unless
contemporaneously therewith: 
 
(1) in the case of any Lien securing an obligation that ranks pari passu with the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, at least equally and
ratably with or prior to such obligation with a Lien on the same collateral; and 
 

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(2) in the case of any Lien securing an obligation that is subordinated in right of payment to the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, with a Lien on
the same collateral that is prior to the Lien securing such subordinated obligation, 
 
in each case, for so long as such obligation is secured by such Lien. 
 
SECTION 4.12. Conduct of Business. 
 
The Parent will not, and will not permit any Restricted Subsidiary to, engage in any business other than the Permitted Business. 
 
SECTION 4.14. Additional Note Guarantees. 
 
If, after the Issue Date, (a) the Parent or any Restricted Subsidiary shall acquire or create another
Subsidiary (other than (i) a Subsidiary that has been designated an Unrestricted Subsidiary and (ii) a Joint Venture that has become a Restricted Subsidiary because of a change in GAAP relating to consolidation) or (b) any Unrestricted Subsidiary is
redesignated a Restricted Subsidiary, then, in each such case, the Parent shall cause such Restricted Subsidiary to: 
 
(1) execute and deliver to the Trustee (a) a supplemental indenture in form and substance satisfactory to the Trustee
pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer’s obligations under the Notes and this Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and 
 
(2) deliver to the Trustee one or more
Opinions of Counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such Restricted Subsidiary and (b) constitutes a valid and legally binding obligation of such Restricted Subsidiary in accordance with its
terms. 
 
SECTION 4.14. Limitations on Dividend and Other
Restrictions Affecting Restricted Subsidiaries. 
 
The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary (other than the Issuer) to: 
 
(a) pay dividends or make any other distributions on or in respect of its Equity Interests; 
 

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(b) make loans or advances or pay any Indebtedness or other obligation owed to the Parent or any other Restricted Subsidiary; or 
 
(c) transfer any of its assets to the Parent or any other Restricted Subsidiary; except for: 
 
(1) encumbrances or restrictions existing
under or by reason of applicable law; 
 
(2) encumbrances or restrictions existing under this Indenture, the Notes and the Note Guarantees; 
 
(3) non-assignment provisions of any contract or any lease entered into in the ordinary course of business; 
 
(4) encumbrances or restrictions existing
under agreements existing on the date of this Indenture (including, without limitation, the Credit Facilities) as in effect on that date; 
 
(5) restrictions on the transfer of assets subject to any Lien permitted under this Indenture imposed by the holder of
such Lien; 
 
(6) restrictions on
the transfer of assets imposed under any agreement to sell such assets permitted under this Indenture to any Person pending the closing of such sale; 
 
(7) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or
the assets of any Person, other than the Person or the assets so acquired; 
 
(8) encumbrances or restrictions arising in connection with Refinancing Indebtedness; provided, however, that any such encumbrances and restrictions are not materially more restrictive than
those contained in the agreements creating or evidencing the Indebtedness being refinanced; 
 
(9) customary provisions in leases, licenses, partnership agreements, limited liability company organizational governance
documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of leasehold interests or ownership interests in such partnership, limited liability company, joint venture
or similar Person; 
 

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(10) Purchase Money Indebtedness incurred in compliance with Section 4.06 that impose restrictions of the nature described in clause (c) above on the assets acquired; 
 
(11) Non-Recourse Indebtedness incurred in compliance with Section 4.06 that impose
restrictions of the nature described in clause (c) above on the assets secured by such Non-Recourse Indebtedness or on the Equity Interests in the Person holding such assets; 
 
(12) customary restrictions in other Indebtedness incurred in compliance with Section 4.06,
provided that such restrictions, taken as a whole, are, in the good faith judgment of the Parent’s Board of Directors, no more materially restrictive with respect to such encumbrances and restrictions than those contained in the existing
agreements referenced in clause (4) above; and 
 
(13) any encumbrances or restrictions imposed by any amendments or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) above; provided that such amendments or refinancings are, in
the good faith judgment of the Parent’s Board of Directors, no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing. 
 
SECTION 4.15. Limitations on Designation of Unrestricted Subsidiaries.

 
The Parent may designate any Subsidiary of the
Parent (other than the Issuer) as an “Unrestricted Subsidiary” under this Indenture (a “Designation”) only if: 
 
(1) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and

 
(2) the Parent would be
permitted to make, at the time of such Designation, (a) a Permitted Investment or (b) an Investment pursuant to the first paragraph of Section 4.08 above, in either case, in an amount (the “Designation Amount”) equal to the Fair
Market Value of the Parent’s proportionate interest in such Subsidiary on such date. 
 
No Subsidiary shall be Designated as an “Unrestricted Subsidiary” unless such Subsidiary: 
 
(1) has no Indebtedness other than Permitted Unrestricted Subsidiary Debt; 
 

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(2) is not party to any agreement, contract, arrangement or understanding with the Parent or any Restricted Subsidiary unless the terms of the agreement, contract, arrangement or understanding (i) are no less favorable to the Parent
or the Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Parent or such Restricted Subsidiary or (ii) would be permitted as (a) an Affiliate Transaction under and in compliance with
Section 4.10, (b) an Asset Sale under and in compliance with Section 4.09, (c) a Permitted Investment or (d) an Investment under and in compliance with Section 4.08; 
 
(3) is a Person with respect to which neither the Parent nor any Restricted Subsidiary has
any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve the Person’s financial condition or to cause the Person to achieve any specified levels of operating results; and 
 
(4) has not guaranteed or otherwise directly
or indirectly provided credit support for any Indebtedness of the Parent or any Restricted Subsidiary. 
 
If, at any time after the Designation, any Unrestricted Subsidiary fails to meet the requirements set forth in the preceding paragraph, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of the Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of the date and, if
the Indebtedness is not permitted to be incurred under Section 4.06 or the Lien is not permitted under Section 4.11, the Parent shall be in default of the applicable covenant. 
 
Notwithstanding the foregoing, the Parent may Designate a Subsidiary as an Unrestricted Subsidiary without
complying with the first two paragraphs of this Section 4.15 if (a) such Subsidiary is a Consolidated Joint Venture and (b) such Designation is made within 30 days of such Joint Venture becoming a Subsidiary. Any such Unrestricted Subsidiary shall,
however, be required subsequent to such Designation to comply with the immediately preceding paragraph; provided that such Unrestricted Subsidiary shall not be deemed to be in violation of the requirements set forth in the second paragraph of
this covenant to the extent that the Indebtedness, obligation, agreement or other arrangement that would otherwise violate such paragraph was in existence at the time such Joint Venture became a Subsidiary as in effect at such time. 
 
The Parent may not Designate the Issuer as an Unrestricted
Subsidiary. As of the Issue Date, the Parent shall be deemed to have Designated Duxford Title Reinsurance Company, Cerro Plata Associates, LLC, 242 Cerro Plata, LLC and Fairway Farms, LLC, as Unrestricted Subsidiaries. 
 
The Parent may redesignate an Unrestricted Subsidiary as a
Restricted Subsidiary (a “Redesignation”) only if: 
 

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(1) no Default shall have occurred and be continuing at the time of and after giving effect to such Redesignation; and 
 
(2) all Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding immediately following such
Redesignation would, if incurred or made at such time, have been permitted to be incurred or made for all purposes of this Indenture. 
 
All Designations and Redesignations must be evidenced by resolutions of the Board of Directors of the Parent delivered to the Trustee and
certifying compliance with the foregoing provisions. 
 
SECTION
4.16. Maintenance of Consolidated Tangible Net Worth. 
 
If the Parent’s Consolidated Tangible Net Worth declines below $75.0 million (the “Minimum Tangible Net Worth”) at the end of any fiscal quarter, the Parent must deliver an Officers’ Certificate to the
Trustee within 55 days after the end of that fiscal quarter (100 days after the end of any fiscal year) to notify the Trustee. If, on the last day of each of any two consecutive fiscal quarters (the last day of the second fiscal quarter being
referred to as a “Deficiency Date”), the Parent’s Consolidated Tangible Net Worth is less than the Minimum Tangible Net Worth of the Parent, then the Issuer must make an Offer to Purchase (a “Net Worth Offer”)
to all Holders of Notes to purchase 10% of the aggregate principal amount of the Notes originally issued (the “Net Worth Offer Amount”) at a purchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid
interest thereon, if any, to the date of purchase; provided, however, that no such Net Worth Offer shall be required if, after the Deficiency Date but prior to the date the Issuer is required to make the Net Worth Offer, capital in cash or
Cash Equivalents is contributed for Qualified Equity Interests sufficient to increase the Parent’s Consolidated Tangible Net Worth after giving effect to such contribution to an amount equal to or above the Minimum Tangible Net Worth.

 
The Issuer must make the Net Worth Offer no
later than 65 days after each Deficiency Date (110 days if such Deficiency Date is the last day of the Parent’s fiscal year). The Net Worth Offer is required to remain open for a period of 20 Business Days following its commencement or for such
longer period as required by law. The Issuer is required to purchase the Net Worth Offer Amount of the Notes on a designated date no later than five Business Days after the termination of the Net Worth Offer, or if less than the Net Worth Offer
Amount of Notes shall have been tendered, all Notes then tendered. 
 
If the aggregate principal amount of Notes tendered exceeds the Net Worth Offer Amount, the Issuer is required to purchase the Notes tendered to it pro rata among the Notes tendered (with such adjustments as may be
appropriate so that only Notes in denominations of $1,000 and integral multiples thereof shall be purchased). 
 

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In no event
shall the failure of the Parent’s Consolidated Tangible Net Worth to equal or exceed the Minimum Tangible Net Worth at the end of any fiscal quarter be counted toward the requirement to make more than one Net Worth Offer. The Issuer may reduce
the principal amount of Notes to be purchased pursuant to the Net Worth Offer by subtracting 100% of the principal amount (excluding premium) of the Notes redeemed by the Issuer prior to the purchase (otherwise than under this provision). The
Issuer, however, may not credit Notes that have been previously used as a credit against any obligation to repurchase Notes pursuant to this provision. 
 
The Issuer shall comply with applicable tender offer rules, including the requirements of Rule 14e-1 under the Exchange Act and any other
applicable laws and regulations in connection with the purchase of Notes pursuant to a Net Worth Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.16, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.16 by virtue of this compliance. 
 
SECTION 4.17. Maintenance of Properties; Insurance; Compliance with Law. 
 
(a) The Parent shall, and shall cause each of its Restricted Subsidiaries to, at all times cause all
properties used or useful in the conduct of their business to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment, and shall cause to be made all necessary
repairs, renewals, replacements, necessary betterments and necessary improvements thereto. 
 
(b) The Parent shall maintain, and shall cause to be maintained for each of its Restricted Subsidiaries, insurance covering such risks as are usually and customarily insured against by corporations
similarly situated in the markets where the Parent and the Restricted Subsidiaries conduct homebuilding operations, in such amounts as shall be customary for corporations similarly situated and with such deductibles and by such methods as shall be
customary and reasonably consistent with past practice. 
 
(c) The Parent shall, and shall cause each of its Subsidiaries to, comply with all statutes, laws, ordinances or government rules and regulations to which they are subject, non-compliance with which would materially adversely affect
the business, earnings, properties, assets or financial condition of the Parent and its Subsidiaries taken as a whole. 
 
SECTION 4.18. Payments for Consent. 
 
The Parent shall not, and shall not cause or permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders which so consent, waive or 
 

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agree to amend in the time
frame set forth in solicitation documents relating to such consent, waiver or agreement. 
 
SECTION 4.20. Legal Existence. 
 
Subject to Article Five, the Parent shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its legal existence, and the corporate, partnership or other existence of each Restricted
Subsidiary, in accordance with the respective organizational documents (as the same may be amended from time to time) of each Restricted Subsidiary and the rights (charter and statutory), licenses and franchises of the Parent and its Restricted
Subsidiaries; provided that the Parent shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries (other than the Issuer) if the Board of
Directors of the Parent shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Parent and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders. 
 
SECTION 4.20. Change of Control
Offer. 
 
Upon the occurrence of a Change of
Control, the Issuer shall be obligated to make an Offer to Purchase (the “Change of Control Offer”), and shall purchase, on a Business Day (the “Change of Control Payment Date”) not more than 60 nor less than 30
days following the date notice of the Change of Control is mailed to each Holder, all of the then outstanding Notes at a purchase price (the “Change of Control Purchase Price”) equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, thereon to the Change of Control Payment Date. The Change of Control Offer shall remain open for at least 20 Business Days and until the close of business on the Change of Control Payment Date. 
 
Within 30 days following the date upon which a Change of
Control occurs (the “Change of Control Date”), the Issuer shall send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. 
 
Any amounts remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned by the Trustee to the Issuer.

 
The Issuer’s obligation to make a Change of
Control Offer will be satisfied if a third party makes the Change of Control Offer in the manner and at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Issuer and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer. 
 

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The Issuer shall comply with applicable tender rules, including the requirements of Rule
14e-1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. To the extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.20, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.20 by virtue thereof. 
 
ARTICLE FIVE 
 
SUCCESSOR CORPORATION 
 
SECTION 5.01. Limitations on Mergers, Consolidations, Etc.

 
Neither the Parent nor the Issuer shall,
directly or indirectly, in a single transaction or a series of related transactions, (a) consolidate or merge with or into any Person (other than a merger that satisfies the requirements of clause (1) below with a Wholly-Owned Restricted Subsidiary
solely for the purpose of changing the Parent’s or the Issuer’s jurisdiction of incorporation, as the case may be, to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or
substantially all of the assets of the Parent or the Parent and the Restricted Subsidiaries (taken as a whole) or the Issuer or the Issuer and the Restricted Subsidiaries that are Subsidiaries of the Issuer (taken as a whole), as the case may be, to
any Person or (b) adopt a Plan of Liquidation unless, in either case: 
 
(1) either: 
 
(a) the Parent or the Issuer, as the case may be, will be the surviving or continuing Person; or 
 
(b) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other
disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a corporation or limited liability company organized and existing under the laws of
any State of the United States of America or the District of Columbia, and the Successor expressly assumes, by supplemental indenture in form and substance satisfactory to the Trustee, all of the obligations of the Issuer or the Parent, as the case
may be, under the Notes or the Parent’s Note Guarantee, as applicable, and this Indenture; provided that, in the case of the Issuer, at any time the Successor is a limited liability company, there shall be a co-issuer of the Notes that
is a corporation; 
 
(2)
immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above 
 

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and the incurrence of any Indebtedness to be incurred in connection therewith, no Default
shall have occurred and be continuing; and 
 
(3) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net
proceeds therefrom on a pro forma basis, (a) the Consolidated Net Worth of the Parent or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Parent immediately prior to such transaction (disregarding the
effect of fees, commissions, discounts, taxes and other amounts payable in respect of such transaction) and (b) the Parent or the Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Ratio Exception.

 
For purposes of this Section 5.01, any
Indebtedness of the Successor which was not Indebtedness of the Parent or the Issuer, as the case may be, immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction. 
 
Except as provided under Section 10.04, no Subsidiary
Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person, whether or not affiliated with such Subsidiary Guarantor, unless: 
 
(1) either: 
 
(a) such Subsidiary Guarantor will be the
surviving or continuing Person; or 
 
(b) the Person formed by or surviving any such consolidation or merger assumes, by supplemental indenture in form and substance satisfactory to the Trustee, all of the obligations of such Subsidiary Guarantor under the Note Guarantee
of such Subsidiary Guarantor and this Indenture; and 
 
(2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing. 
 
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions)
of all or substantially all of the assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the assets of the Parent or the Issuer, will be deemed to be the transfer of all or substantially
all of the assets of the Parent or the Issuer, as the case may be. 
 
Notwithstanding the foregoing, any Restricted Subsidiary (other than the Issuer) may merge into the Parent or another Restricted Subsidiary. 
 

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SECTION 5.02. Successor
Person Substituted. 
 
Upon any consolidation,
combination or merger of the Issuer or a Guarantor, or any transfer of all or substantially all of the assets of the Parent or the Issuer in accordance with Section 5.01, in which the Issuer or such Guarantor is not the continuing obligor under the
Notes or its Note Guarantee, the surviving entity formed by such consolidation or into which the Issuer or such Guarantor is merged or to which the conveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every
right and power of, the Issuer or such Guarantor under this Indenture, the Notes and the Note Guarantees with the same effect as if such surviving entity had been named therein as the Issuer or such Guarantor and, except in the case of a conveyance,
transfer or lease, the Issuer or such Guarantor, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes or in respect of its Note Guarantee, as the case may be, and all of the Issuer’s or such
Guarantor’s other obligations and covenants under the Notes, this Indenture and its Note Guarantee, if applicable. 
 
ARTICLE SIX 
 
DEFAULTS AND REMEDIES 
 
SECTION 6.01. Events of Default. 
 
Each of the following is an “Event of Default”: 
 
(1) failure by the Issuer to pay interest on any of the Notes when it becomes due and payable
and the continuance of any such failure for 30 days; 
 
(2) failure by the Issuer to pay the principal on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon purchase, upon acceleration or otherwise; 
 
(3) failure by the Parent or the Issuer to
comply with any of its agreements or covenants described above under Section 5.01 or in respect of its obligations to make a Change of Control Offer; 
 
(4) failure by the Parent or the Issuer to comply with any other agreement or covenant in this Indenture and continuance
of this failure for 30 days after written notice of the failure has been given to the Issuer by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding; 
 
(5) default under any mortgage, indenture or
other instrument or agreement under which there may be issued or by which there may be secured or evidenced Indebtedness (other than Non-Recourse Indebtedness) of the Parent or any Restricted 
 

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Subsidiary, whether such Indebtedness now exists or is incurred after the
Issue Date, which default: 
 
(a)
is caused by a failure to pay when due principal on such Indebtedness within the applicable express grace period, 
 
(b) results in the acceleration of such Indebtedness prior to its express final maturity, or 
 
(c) results in the commencement of judicial
proceedings to foreclose upon, or to exercise remedies under applicable law or applicable security documents to take ownership of, the assets securing such Indebtedness, and 
 
in each case, the principal amount of such Indebtedness, together with any other Indebtedness with respect to
which an event described in clause (a), (b) or (c) has occurred and is continuing, aggregates $10.0 million or more; 
 
(6) one or more judgments or orders that exceed $10.0 million in the aggregate (net of amounts covered by insurance or
bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Parent or any Restricted Subsidiary and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of
being entered; 
 
(7) the Parent,
the Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: 
 
(a) commences a voluntary case, 
 
(b) consents to the entry of an order for relief against it in an involuntary case, 
 
(c) consents to the appointment of a
Custodian of it or for all or substantially all of its assets, or 
 
(d) makes a general assignment for the benefit of its creditors; 
 
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 
 
(a) is for relief against the Parent, the
Issuer or any Significant Subsidiary as debtor in an involuntary case, 
 

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(b) appoints a Custodian of the Parent, the Issuer or any Significant
Subsidiary or a Custodian for all or substantially all of the assets of the Parent, the Issuer or any Significant Subsidiary, or 
 
(c) orders the liquidation of the Parent, the Issuer or any Significant Subsidiary, 
 
and the order or decree remains unstayed and in effect for 60
days; or 
 
(9) the Note Guarantee
of the Parent or any Note Guarantee of any Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Note Guarantee and this Indenture) or is declared null and void and unenforceable or found to be
invalid or any Guarantor denies its liability under its Note Guarantee (other than by reason of release of a Guarantor from its Note Guarantee in accordance with the terms of this Indenture and the Note Guarantee). 
 
SECTION 6.02. Acceleration. 
 
If an Event of Default (other than an Event of Default
specified in clause (7) or (8) of Section 6.01 with respect to the Issuer), shall have occurred and be continuing, the Trustee, by written notice to the Issuer, or the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Issuer and the Trustee, may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of and accrued and unpaid interest on the
outstanding Notes shall immediately become due and payable; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of such outstanding
Notes may rescind and annul such acceleration if all Events of Default, other than the nonpayment of accelerated principal and interest, have been cured or waived as provided in this Indenture. If an Event of Default specified in clause (7) or (8)
of Section 6.01 with respect to the Issuer occurs, all outstanding Notes shall become due and payable without any further action or notice. 
 
SECTION 6.03. Other Remedies. 
 
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of, or premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture and may take any necessary action requested of it as Trustee to settle, compromise, adjust or
otherwise conclude any proceedings to which it is a party. 
 
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an
Event of Default shall not 
 

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impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative. Any costs associated with actions taken by the Trustee under this Section 6.03 shall be reimbursed to the Trustee by the Issuer. 
 
SECTION 6.04 Waiver of Past Defaults and Events of Default.

 
Subject to Sections 6.02, 6.08 and 8.02, the
Holders of a majority in aggregate principal amount of the notes then outstanding have the right to waive any existing Default or compliance with any provision of this Indenture or the Notes. Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. 
 
SECTION 6.05. Control by Majority. 
 
The Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee by this Indenture. The Trustee, however, may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of another Holder not taking part in such direction, and the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, determines that the action so directed may not lawfully be taken or if the Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed may involve it in
personal liability or be unduly prejudicial to the rights of another Holder; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 
 
SECTION 6.06. Limitation on Suits. 
 
No Holder will have any right to institute any proceeding with
respect to this Indenture or for any remedy thereunder, unless the Trustee: 
 
(1) has failed to act for a period of 60 days after receiving written notice of a continuing Event of Default by such Holder and a request to act by Holders of at least 25% in aggregate principal
amount of Notes outstanding; 
 
(2) has been offered indemnity satisfactory to it in its reasonable judgment; and 
 
(3) has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction
inconsistent with such request. 
 

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However, such limitations do
not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace period specified in clause (1) of Section 6.01).

 
SECTION 6.07. No Personal Liability of Directors, Officers,
Employees and Stockholders. 
 
No director,
officer, employee, incorporator or stockholder of the Issuer or any Guarantor will have any liability for any obligations of the Issuer under the Notes or this Indenture or of any Guarantor under its Note Guarantee or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Note
Guarantees. 
 
SECTION 6.08. Rights of Holders To Receive
Payment. 
 
Notwithstanding any other provision
of this Indenture, the right of any Holder of a Note to receive payment of principal of, or premium, if any, and interest of the Note on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. 
 
SECTION 6.09. Collection Suit by Trustee. 
 
If an Event of Default in payment of principal, premium or interest specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any Guarantor (or any other obligor on the Notes) for the whole amount of unpaid principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate set forth in the Notes, and such further amounts as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 
 
SECTION 6.10. Trustee May File Proofs of Claim. 
 
The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07) and the Holders allowed in any judicial
proceedings relative to the Issuer or any Guarantor (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such
claims 
 

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and to distribute the same after deduction of its charges and expenses to the extent that any such charges
and expenses are not paid out of the estate in any such proceedings and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07. 
 
Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceedings. 
 
SECTION 6.11. Priorities. 
 
If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: 
 
FIRST: to the Trustee for amounts due under Section 7.07; 
 
SECOND: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest as to
each, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes; and 
 
THIRD: to the Issuer or, to the extent the Trustee collects any amount from any Guarantor, to such Guarantor. 
 
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.11. 
 
SECTION 6.12.
Undertaking for Costs. 
 
In any suit for
the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.08 or a suit by Holders of more than 10% in principal amount of the Notes then outstanding. 
 

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SECTION 6.13. Restoration
of Rights and Remedies. 
 
If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every
case, subject to any determination in such proceeding, the Issuer, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted. 
 
ARTICLE SEVEN 
 
TRUSTEE 
 
SECTION 7.01. Duties of Trustee.

 
(a) If an Event of Default actually known to a
Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise
or use under the same circumstances in the conduct of his or her own affairs. 
 
(b) Except during the continuance of an Event of Default: 
 
(1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.

 
(2) In the absence of bad faith
on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture but,
in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to
the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). 
 
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that: 
 
(1)
This paragraph does not limit the effect of paragraph (b) of this Section 7.01. 
 

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(2) The Trustee shall not be liable for any error of judgment made in good faith, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. 
 
(3) The Trustee shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to the terms hereof. 
 
(4) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its rights, powers or duties if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably
assured to it. 
 
(d) Whether or not therein
expressly so provided, paragraphs (a), (b), (c) and (e) of this Section 7.01 shall govern every provision of this Indenture that in any way relates to the Trustee. 
 
(e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it in its sole discretion against any loss, liability, expense or fee. 
 
(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer or any Guarantor. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by the law. 
 
SECTION 7.02. Rights of Trustee. 
 
Subject to Section 7.01: 
 
(1) The Trustee may rely on any document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in
the document. 
 
(2) Before the
Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, or both, which shall conform to the provisions of Section 12.05. The Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion. 
 
(3) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of
any agent appointed by it with due care. 
 

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(4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided that the Trustee’s conduct does not
constitute gross negligence or willful misconduct. 
 
(5) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. 
 
(6) Except with respect to Sections 4.01, 4.02 and 4.04, the Trustee shall have no duty to inquire as to the performance
of the Issuer’s and the Guarantors’ covenants in Article Four hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (1) any Event of Default occurring pursuant to Sections 6.01(1)
and 6.01(2) or (ii) any Default or Event of Default of which the Trustee shall have received written notice in the manner set forth in this Indenture or an officer of the Trustee shall have obtained actual knowledge. Delivery of reports, information
and documents to the Trustee under Section 4.02 is for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information
contained therein, including the Issuer’s and the Guarantors’ compliance with any of their covenants thereunder (as to which the Trustee is entitled to rely exclusively on an Officers’ Certificate). 
 
 
SECTION 7.03. Individual Rights of Trustee. 
 
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with the either of the Issuer or any Guarantor, or any Affiliates thereof, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11. 
 
 
SECTION 7.04. Trustee’s Disclaimer. 
 
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this
Indenture or the Notes or any Guarantee, it shall not be accountable for the Issuer’s or any Guarantor’s use of the proceeds from the sale of Notes or any money paid to the Issuer or any Guarantor pursuant to the terms of this Indenture
and it shall not be responsible for any statement in the Notes, Guarantee or this Indenture other than its certificate of authentication. 
 
 

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SECTION 7.05. Notice of Defaults. 
 
The Trustee shall, within 90 days after becoming aware of the occurrence of any Default with respect to the Notes, give the Holders notice of all uncured Defaults thereunder known to it; provided, however, that, except in the
case of an Event of Default in payment with respect to the Notes or a Default in complying with Section 5.01, the Trustee shall be protected in withholding such notice if and so long as a committee of its Responsible Officers in good faith
determines that the withholding of such notice is in the interest of the Holders. 
 
SECTION 7.06. Reports by Trustee to Holders. 
 
If required by TIA § 313(a), within 60 days after May 15 of any year, commencing May 15, 2003 the
Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA §
313(c) and TIA § 313(d). 
 
Reports pursuant
to this Section 7.06 shall be transmitted by mail: 
 
(1) to all Holders of Notes, as the names and addresses of such Holders appear on the Registrar’s books; and 
 
(2) to such Holders of Notes as have, within the two years preceding such transmission, filed their names and addresses
with the Trustee for that purpose. 
 
A copy of
each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange on which the Notes are listed. The Issuer shall promptly notify the Trustee when the Notes are listed on any stock exchange. 
 
 
SECTION 7.07. Compensation and Indemnity. 
 
The Issuer and the Guarantors shall pay to the Trustee and Agents from time to time reasonable compensation for its services hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust). The Issuer and the Guarantors shall reimburse the Trustee and Agents upon request for all reasonable disbursements, expenses and advances incurred or made by it in connection with its
duties under this Indenture, including the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel. 
 
The Issuer and the Guarantors shall indemnify each of the Trustee and any predecessor Trustee for, and hold each of them harmless against,
any and all loss, damage, claim, liability or expense, including without limitation taxes (other than taxes based on the 
 

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income of the Trustee or such
Agent) and reasonable attorneys’ fees and expenses incurred by each of them in connection with the acceptance or performance of its duties under this Indenture including the reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder (including, without limitation, settlement costs). The Trustee or Agent shall notify the Issuer and the Guarantors in writing promptly of any claim
asserted against the Trustee or Agent for which it may seek indemnity. However, the failure by the Trustee or Agent to so notify the Issuer and the Guarantors shall not relieve the Issuer and Guarantors of their obligations hereunder except to the
extent the Issuer and the Guarantors are prejudiced thereby. 
 
Notwithstanding the foregoing, the Issuer and the Guarantors need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by the Trustee through its negligence or bad faith. To secure the
payment obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee except such money or property held in trust to pay principal of and
interest on particular Notes. The obligations of the Issuer and the Guarantors under this Section 7.07 to compensate and indemnify the Trustee, Agents and each predecessor Trustee and to pay or reimburse the Trustee, Agents and each predecessor
Trustee for expenses, disbursements and advances shall be joint and several liabilities of the Issuer and each of the Guarantors and shall survive the resignation or removal of the Trustee and the satisfaction, discharge or other termination of this
Indenture, including any termination or rejection hereof under any Bankruptcy Law. 
 
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) occurs, the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law. 
 
For purposes of this Section 7.07, the term “Trustee” shall include any trustee appointed pursuant to this Article Seven. 
 
SECTION 7.08. Replacement of Trustee. 
 
The Trustee may resign by so notifying the Issuer and the Guarantors in writing. The Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee by notifying the Issuer and the removed Trustee in writing and may appoint a successor Trustee with the Issuer’s written consent, which consent shall not be unreasonably withheld.
The Issuer may remove the Trustee at its election if: 
 
(1) the Trustee fails to comply with Section 7.10; 
 
(2) the Trustee is adjudged a bankrupt or an insolvent; 
 

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(3) a receiver or other public officer takes charge of the Trustee or its property; or 
 
(4) the Trustee otherwise becomes incapable of acting. 
 
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the
Issuer shall promptly appoint a successor Trustee. 
 
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of a majority in principal amount of the outstanding Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee. 
 
If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 
 
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately following such delivery, the retiring Trustee shall, subject to its rights under Section 7.07, transfer all property held by it as Trustee to the successor Trustee, the resignation
or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. 
 
SECTION 7.09. Successor Trustee by Consolidation, Merger, etc. 
 
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another entity, subject to Section 7.10, the successor entity without any further act shall be the successor Trustee; provided such entity shall be otherwise qualified and
eligible under this Article Seven. 
 
SECTION 7.10. Eligibility; Disqualification. 
 
This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1) and (2) in every respect. The Trustee (together with its corporate parent) shall have a combined capital and surplus of at
least $75,000,000 as set forth in the most recent applicable published annual report of condition. The Trustee shall comply with TIA § 310(b), including the provision in § 310(b)(1). 
 

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SECTION 7.11. Preferential Collection of Claims Against Issuer. 
 
The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311 (b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to
the extent indicated therein. 
 
SECTION 7.12. Paying Agents. 
 
The Issuer shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.12:

 
(A) that it will hold all sums held by it as
agent for the payment of principal of, or premium, if any, or interest on, the Notes (whether such sums have been paid to it by the Issuer or by any obligor on the Notes) in trust for the benefit of Holders or the Trustee; 
 
(B) that it will at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting thereof; and 
 
(C) that it will give the Trustee written notice within three (3) Business Days of any failure of the Issuer (or by any obligor on the
Notes) in the payment of any installment of the principal of, premium, if any, or interest on, the Notes when the same shall be due and payable. 
 
 
ARTICLE EIGHT 
 
AMENDMENTS, SUPPLEMENTS AND WAIVERS 
 
SECTION 8.01. Without Consent of
Holders. 
 
The Issuer, the Guarantors and the
Trustee may amend, waive or supplement this Indenture, the Note Guarantees or the Notes without consent of any Holder: 
 
(1) to provide for the assumption of the Issuer’s obligations to the Holders pursuant to Section 5.01; 
 
(2) to provide for uncertificated Notes in
addition to or in place of certificated Notes; 
 
(3) to cure any ambiguity, defect or inconsistency; 
 
(4) to release any Guarantor from any of its obligations under its Notes Guarantee or this Indenture (to the extent permitted by this Indenture); 
 

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(5) to comply with SEC rules and regulations or changes to applicable law; 
 
(6) to maintain the qualification of this Indenture under the TIA; or 
 
(7) to make any other change that does not
materially adversely affect the rights of any Holder hereunder. 
 
The Trustee is hereby authorized to join with the Issuer and the Guarantors in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects its own rights, duties or immunities under this Indenture. 
 
SECTION 8.02. With Consent of Holders.

 
This Indenture or the Notes may be amended with
the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance
with any provision of, this Indenture may be waived (other than any continuing Default in the payment of the principal or interest on the Notes) with the consent (which may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding; provided that: 
 
(a) no such amendment may, without the consent of the Holders of two-thirds in aggregate principal amount of Notes then outstanding, amend
the obligation of the Parent or the Issuer under Section 4.20 or the related definitions that could adversely affect the rights of any Holder; and 
 
(b) without the consent of each Holder affected, the Issuer, the Guarantors and the Trustee may not: 
 
(1) change the maturity of any Note;

 
(2) reduce the amount, extend
the due date or otherwise affect the terms of any scheduled payment of interest on or principal of the Notes; 
 
(3) reduce any premium payable upon optional redemption of the Notes, change the date on which any Notes are subject to
redemption or otherwise alter the provisions with respect to the redemption of the Notes; 
 

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(4) make any Note payable in money or currency other than that stated in the Notes; 
 
(5) modify or change any provision of this Indenture or the related definitions to subordinate the Notes or any Note
Guarantee to other Indebtedness in a manner that adversely affects the Holders; 
 
(6) reduce the percentage of Holders necessary to consent to an amendment or waiver to this Indenture or the Notes; 
 
(7) impair the rights of Holders to receive payments of principal of or interest on the
Notes; 
 
(8) release the Parent
from any of its obligations under its Note Guarantee or this Indenture, except as permitted by this Indenture; or 
 
(9) make any change in this Section 8.02. 
 
After an amendment, supplement or waiver under this Section 8.02 becomes effective, the Issuer shall mail to
the Holders a notice briefly describing the amendment, supplement or waiver. 
 
Upon the written request of the Issuer, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the receipt by the Trustee of evidence reasonably
satisfactory to the Trustee of the consent of the Holders as aforesaid and upon receipt by the Trustee of the documents described in Section 8.06, the Trustee shall join with the Issuer and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture, in which case the Trustee may, but shall not be obligated to, enter into such supplemental indenture. 
 
It shall not be necessary for the consent of the Holders under
this Section 8.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. 
 
SECTION 8.03. Compliance with Trust Indenture Act. 
 
Every amendment or supplement to this Indenture or the Notes
shall comply with the TIA as then in effect. 
 
SECTION 8.04. Revocation and Effect of Consents. 
 
Until an amendment, supplement, waiver or other action becomes effective, a consent to it by a Holder of a Note is a continuing consent conclusive and binding upon such 
 

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Holder and every subsequent
Holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Note. Any such Holder or subsequent Holder, however,
may revoke the consent as to his Note or portion of a Note, if the Trustee receives the written notice of revocation before the date the amendment, supplement, waiver or other action becomes effective. 
 
The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver. If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date unless the consent of the requisite number of Holders has been obtained. 
 
After an amendment, supplement, waiver or other action becomes effective, it shall bind every Holder, unless it makes a change described
in any of clauses (1) through (9) of Section 8.02. In that case the amendment, supplement, waiver or other action shall bind each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder’s Note. 
 
SECTION 8.05. Notation on or Exchange of Notes. 
 
If an amendment, supplement, or waiver changes the terms of a Note, the Trustee (in accordance with the specific written direction of the Issuer) shall request the Holder of the Note (in accordance with the specific written
direction of the Issuer) to deliver it to the Trustee. In such case, the Trustee shall place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Issuer or the Trustee so determines, the
Issuer in exchange for the Note shall issue, the Guarantors shall endorse, and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver. 
 
SECTION 8.06 Trustee To Sign Amendments, etc. 
 
The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article Eight if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver the Trustee shall be entitled to receive and, subject to Section 7.01, shall be fully protected in relying upon an
Officers’ Certificate and an Opinion of Counsel stating, in addition to the matters required by Section 12.04, that such amendment, supplement or waiver is authorized or permitted 
 

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by this Indenture and is a
legal, valid and binding obligation of the Issuer and Guarantors, enforceable against the Issuer and Guarantors in accordance with its terms (subject to customary exceptions). 
 
 
ARTICLE NINE 
 
DISCHARGE OF INDENTURE; DEFEASANCE 
 
SECTION 9.01 Discharge of Indenture.

 
The Issuer may terminate its obligations and the
obligations of the Guarantors under the Notes, the Guarantees and this Indenture, except the obligations referred to in the last paragraph of this Section 9.01, if 
 
(1) all the Notes that have been authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from this trust) have been delivered to
the Trustee for cancellation, or 
 
(2) (a) all Notes not delivered to the Trustee for cancellation otherwise have become due and payable or have been called for redemption pursuant to paragraph 6 of the Notes, and the Issuer has irrevocably deposited or caused to be
deposited with the Trustee trust funds in trust in an amount of money sufficient to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation,

 
(b) the Issuer has paid all
sums payable by it under this Indenture, 
 
(c) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the date of redemption, as the case may be, and 
 
(d) the Trustee, for the benefit of the
Holders, has a valid, perfected, exclusive security interest in this trust. 
 
In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel (as to legal matters) stating that all conditions precedent to satisfaction and discharge have been complied
with. 
 
After such delivery, the Trustee shall
acknowledge in writing the discharge of the Issuer’s and the Guarantors’ obligations under the Notes, the Guarantees and this Indenture except for those surviving obligations specified below. 
 

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Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Issuer in Sections 7.07, 9.05 and 9.06 shall survive. 
 
SECTION 9.02. Legal Defeasance. 
 
The Issuer may at its option, by Board Resolution of the Board of Directors of the Issuer, be discharged from
its obligations with respect to the Notes and the Guarantors discharged from their obligations under the Guarantees on the date the conditions set forth in Section 9.04 are satisfied (hereinafter, “Legal Defeasance”). For this purpose,
such Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire indebtedness represented by the Notes and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Issuer, shall, subject to Section 9.06, execute instruments in form and substance reasonably satisfactory to the Trustee and Issuer acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of outstanding Notes to receive solely from the trust funds described in Section 9.04 and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are due, (B) the Issuer’s obligations with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.11 and 4.19, (C) the rights, powers, trusts,
duties, and immunities of the Trustee hereunder (including claims of, or payments to, the Trustee under or pursuant to Section 7.07) and (D) this Article Nine. Subject to compliance with this Article Nine, the Issuer may exercise its option under
this Section 9.02 with respect to the Notes notwithstanding the prior exercise of its option under Section 9.03 with respect to the Notes. 
 
SECTION 9.03 Covenant Defeasance. 
 
At the option of the Issuer, pursuant to a Board Resolution of the Board of Directors of the Issuer, (x) the
Issuer and the Guarantors shall be released from their respective obligations under Sections 4.02 (except for obligations mandated by the TIA), 4.05 through 4.17, inclusive, and 4.20 and clause (3) of the first paragraph of Section 5.01 and (y)
Section 6.01 (5) and (6) shall no longer apply with respect to the outstanding Notes on and after the date the conditions set forth in Section 9.04 are satisfied (hereinafter, “Covenant Defeasance”). For this purpose, such Covenant
Defeasance means that the Issuer and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section or portion thereof, whether directly or indirectly by
reason of any reference elsewhere herein to any such specified Section or portion thereof or by reason of any reference in any such specified Section or portion thereof to any other provision herein or in any other document, but the remainder of
this Indenture and the Notes shall be unaffected thereby. 
 

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SECTION 9.04. Conditions to Defeasance or Covenant Defeasance. 
 
The following shall be the conditions to application of Section 9.02 or Section 9.03 to the outstanding Notes: 
 
(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. legal tender,
U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without reinvestment) in the opinion of a nationally recognized firm of independent public accountants selected by the Issuer, to pay the principal of and
interest on the Notes on the stated date for payment or on the redemption date of the principal or installment of principal of or interest on the Notes, and the Trustee must have a valid, perfected, exclusive security interest in such trust,

 
(2) in the case of Legal
Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that: 
 
(a) the Issuer has received from, or there has been published by the Internal Revenue Service, a ruling, or 
 
(b) since the date hereof, there has been a
change in the applicable U.S. federal income tax law, 
 
in either case to the effect that, and based thereon this Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the Legal Defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred, 
 
(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred, 
 
(4) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the
borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing), 
 
(5) the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default
under, this Indenture or any other material 
 

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agreement or
instrument to which the Parent or any of its Subsidiaries is a party or by which the Parent or any of its Subsidiaries is bound, 
 
(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by
it with the intent of preferring the Holders over any other of its creditors or with the intent of defeating, hindering, delaying or defrauding any other of its creditors or others, and 
 
(7) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that the conditions provided for in, in the case of the Officers’ Certificate, clauses (1) through (6) and, in the case of the Opinion of Counsel, clauses (1) (with respect to the validity and perfection of the
security interest), (2) and/or (3) and (5) of this paragraph have been complied with. 
 
If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of and interest on the Notes when due, then the obligations of the Issuer and the Guarantors
under this Indenture will be revived and no such defeasance will be deemed to have occurred. 
 
SECTION 9.05. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions. 
 
All money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee
pursuant to Section 9.04 in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent, to the
Holders of such Notes, of all sums due and to become due thereon in respect of principal, premium, if any, and accrued interest, but such money need not be segregated from other funds except to the extent required by law. 
 
The Issuer and the Guarantors shall (on a joint and several
basis) pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 9.04 or the principal, premium, if any, and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. 
 
Anything in this Article Nine to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time any money
or U.S. Government Obligations held by it as provided in Section 9.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 
 
 

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SECTION 9.06.
Reinstatement. 
 
If the Trustee or Paying
Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer’s and each Guarantor’s obligations under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article Nine until
such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.01; provided that if the Issuer or the Guarantors have made any payment of principal of, premium, if
any, or accrued interest on any Notes because of the reinstatement of their obligations, the Issuer or the Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent. 
 
SECTION 9.07. Moneys Held by Paying Agent. 
 
In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon written demand of the Issuer, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.04, to the Issuer (or, if such moneys had been deposited by the Guarantors, to such Guarantors), and thereupon such Paying Agent shall be released from all further liability with respect to
such moneys. 
 
SECTION 9.08. Moneys Held by Trustee.

 
Subject to applicable law, any moneys deposited
with the Trustee or any Paying Agent or then held by the Issuer or the Guarantors in trust for the payment of the principal of, or premium, if any, or interest on any Note that are not applied but remain unclaimed by the Holder of such Note for two
years after the date upon which the principal of, or premium, if any, or interest on such Note shall have respectively become due and payable shall be repaid to the Issuer (or, if appropriate, the Guarantors), or if such moneys are then held by the
Issuer or the Guarantors in trust, such moneys shall be released from such trust; and the Holder of such Note entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Issuer and the Guarantors for the
payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, that the Trustee or any such Paying Agent, before being required to make any such repayment, may, at the
expense of the Issuer and the Guarantors, either mail to each Holder affected, at the address shown in the register of the Notes maintained by the Registrar pursuant to Section 2.03, or cause to be published once a week for two successive weeks, in
a newspaper published in the English language, customarily published each Business Day and of general circulation in the City of New York, New York, a notice that such money remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the 
 

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date of such mailing or
publication, any unclaimed balance of such moneys then remaining will be repaid to the Issuer. After payment to the Issuer or the Guarantors or the release of any money held in trust by the Issuer or any Guarantors, as the case may be, Holders
entitled to the money must look only to the Issuer and the Guarantors for payment as general creditors unless applicable abandoned property law designates another Person. 
 
ARTICLE TEN 
 
GUARANTEE OF NOTES 
 
SECTION 10.01. Guarantee. 
 
Subject to the provisions of this Article Ten, each Guarantor, by execution of this Indenture, jointly and severally, unconditionally
guarantees to each Holder (i) the due and punctual payment of the principal of, and premium, if any, and interest on the Notes, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal of, and premium and interest on the Notes, to the extent lawful, and the due and punctual payment of all other Obligations and due and punctual performance of all other obligations of the Issuer
to the Holders or the Trustee all in accordance with the terms of such Note and this Indenture, and (ii) in the case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Each Guarantor, by execution of this Indenture, agrees that its obligations hereunder shall be absolute
and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Indenture, any failure to enforce the provisions of any such Note or this Indenture, any waiver, modification
or indulgence granted to the Issuer with respect thereto by the Holder of such Note, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor. 
 
Each Guarantor hereby waives diligence, presentment, demand
for payment, filing of claims with a court in the event of merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged as to any such Note except by payment in full of the principal thereof and interest thereon. Each Guarantor hereby agrees that, as between such Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (i) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Obligations as provided in Article Six, such Obligations 
 

-87- 








 
(whether or not due and
payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. 
 
SECTION 10.02. Execution and Delivery of Guarantee. 
 
To further evidence the Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form included in Exhibit C hereto, shall be endorsed on each Note authenticated and delivered by the Trustee and such Guarantee shall be executed by either manual or facsimile signature of an Officer or an Officer of a
general partner, as the case may be, of each Guarantor. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. 
 
Each of the Guarantors hereby agrees that its Guarantee set forth in Section 10.01 shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. 
 
If an officer of a Guarantor whose signature is on this Indenture or a Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Guarantee is endorsed or at any
time thereafter, such Guarantor’s Guarantee of such Note shall be valid nevertheless. 
 
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of the Guarantor. 
 
SECTION 10.03. Limitation of Guarantee. 
 
The obligations of each Subsidiary Guarantor are limited to
the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect
of the obligations of such other Subsidiary Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Subsidiary Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law. Each Subsidiary Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Subsidiary Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor. 
 

-88- 








 
SECTION 10.04. Release of
Guarantor. 
 
A Subsidiary Guarantor shall be
released from all of its obligations under its Guarantee if: 
 
(i) all of the assets of such Subsidiary Guarantor have been sold or otherwise disposed of in a transaction in compliance with the terms of this Indenture (including Sections 4.09, 4.20 and 5.01);

 
(ii) all of the Equity
Interests held by the Parent and the Restricted Subsidiaries of such Subsidiary Guarantor have been sold or otherwise disposed of in a transaction in compliance with the terms of this Indenture (including Sections 4.20 and 5.01); 
 
(iii) the Subsidiary Guarantor is designated
an Unrestricted Subsidiary in compliance with the terms of this Indenture (including Section 4.15); 
 
and in each such case, the Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to such
transactions have been complied with and that such release is authorized and permitted hereunder. 
 
The Trustee shall execute any documents reasonably requested by the Issuer or a Subsidiary Guarantor in order to evidence the release of
such Subsidiary Guarantor from its obligations under its Guarantee endorsed on the Notes and under this Article Ten. 
 
SECTION 10.05. Waiver of Subrogation. 
 
Each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Issuer that arise
from the existence, payment, performance or enforcement of such Guarantor’s obligations under its Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right
to participate in any claim or remedy of any Holder of Notes against the Issuer, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from
the Issuer, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or Note on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the
Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders, and shall forthwith be paid to the Trustee for the benefit of such
Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated 
 

-89- 








 
by this Indenture and that the
waiver set forth in this Section 10.05 is knowingly made in contemplation of such benefits. 
 
ARTICLE ELEVEN 
 
[INTENTIONALLY OMITTED] 
 
ARTICLE
TWELVE 
 
MISCELLANEOUS 
 
SECTION 12.01. Trust Indenture Act Controls. 
 
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. If any provision of this Indenture modifies any TIA provision that may be so modified, such TIA provision shall be
deemed to apply to this Indenture as so modified. If any provision of this Indenture excludes any TIA provision that may be so excluded, such TIA provision shall be excluded from this Indenture. 
 
The provisions of TIA §§ 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. 
 
SECTION 12.02. Notices. 
 
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by facsimile, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows: 
 
If to the Issuer or any Guarantor:

 
WILLIAM LYON HOMES, INC.

4490 Von Karman Avenue 
Newport Beach, CA 92660 
 
Attention: Chief Financial Officer 
 
Fax Number: (949) 252-2575 
 
with, in the case of any notice furnished pursuant to Article Six, a copy to: 
 

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IRELL & MANELLA LLP 
1800 Avenue of the Stars 
Suite 900 
Los Angeles, CA 90067 
 
Attention: Meredith Jackson, Esq. 
 
Fax Number: (310) 277-1010 
 
If to the Trustee: 
 
U.S. BANK NATIONAL ASSOCIATION 
180 East Fifth Street 
St. Paul, MN 55101 
 
Attention: Corporate Trust Department 
 
Fax Number: (651) 244-0711 
 
Such notices or communications shall be effective when received and shall be sufficiently given if so given within the time prescribed in
this Indenture. 
 
The Issuer, the Guarantors or
the Trustee by written notice to the others may designate additional or different addresses for subsequent notices or communications. 
 
Any notice or communication mailed to a Holder shall be mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar. 
 
Failure to mail
a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in the manner provided above, it shall be deemed duly given, whether or not
the addressee receives it. 
 
In case by reason of
the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a
sufficient mailing of such notice. 
 
SECTION 12.03.
Communications by Holders with Other Holders. 
 
Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuer, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA § 312(c). 
 

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SECTION 12.04. Certificate
and Opinion as to Conditions Precedent. 
 
Upon
any request or application by the Issuer or any Guarantor to the Trustee to take any action under this Indenture, the Issuer or such Guarantor shall furnish to the Trustee: 
 
(1) an Officers’ Certificate (which shall include the statements set forth in Section
12.05) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and 
 
(2) an Opinion of Counsel (which shall include the statements set forth in Section 12.05)
stating that, in the opinion of such counsel, all such conditions precedent have been complied with. 
 
SECTION 12.05. Statements Required in Certificate and Opinion. 
 
Each certificate and opinion with respect to compliance by or on behalf of the Issuer or any Guarantor with a condition or covenant
provided for in this Indenture shall include: 
 
(1) a statement that the Person making such certificate or opinion has read such covenant or condition; 
 
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; 
 
(3) a statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion as to whether or not such covenant or condition has
been complied with; and 
 
(4) a
statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with. 
 
SECTION 12.06. Rules by Trustee and Agents. 
 
The Trustee may make reasonable rules for action by or meetings of Holders. The Registrar and Paying Agent may make reasonable rules for
their functions. 
 

-92- 








 
SECTION 12.07. Governing
Law. 
 
This Indenture and the Notes shall
be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York. 
 
SECTION 12.08. No Adverse Interpretation of Other Agreements. 
 
This Indenture may not be used to interpret another indenture, loan, security or debt agreement of the Issuer
or any Subsidiary thereof. No such indenture, loan, security or debt agreement may be used to interpret this Indenture. 
 
SECTION 12.09. No Recourse Against Others. 
 
No recourse for the payment of the principal of or premium, if any, or interest, on any of the Notes, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer or any Guarantor in this Indenture or in any supplemental indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any stockholder, officer, director or employee, as such, past, present or future, of the Issuer or of any successor corporation or against the property or assets of any such stockholder,
officer, employee or director, either directly or through the Issuer or any Guarantor, or any successor corporation thereof, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the Notes are solely obligations of the Issuer and the Guarantors, and that no such personal liability whatever shall attach to, or is or shall be incurred by, any stockholder,
officer, employee or director of the Issuer or any Guarantor, or any successor corporation thereof, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this
Indenture or the Notes or implied therefrom, and that any and all such personal liability of, and any and all claims against every stockholder, officer, employee and director, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the Notes. It is understood that this limitation on recourse is made expressly for the benefit of any such shareholder, employee, officer or director and may be enforced by any
of them. 
 
SECTION 12.10. Successors. 
 
All agreements of the Issuer and the Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements of the Trustee, any additional trustee and any Paying Agents in this Indenture shall bind its successor. 
 

-93- 








 
SECTION 12.11. Multiple
Counterparts. 
 
The parties may sign multiple
counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement. 
 
SECTION 12.12. Table of Contents, Headings, etc. 
 
The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. 
 
SECTION 12.13. Separability. 
 
Each provision of this Indenture shall be considered separable and if for any reason any provision which is not essential to the
effectuation of the basic purpose of this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
 
 

-94- 








 
IN WITNESS
WHEREOF, the parties have caused this Indenture to be duly executed all as of the date and year first written above. 
 

	 Very truly yours,
  

	 WILLIAM LYON HOMES, INC.
  

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 WILLIAM LYON HOMES 

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 CALIFORNIA EQUITY FUNDING,
INC.

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	
	 By:
	 	 /s/    W. DOUGLASS
HARRIS        


	 Name:
	 	 W. Douglass Harris

	 Title:
	 	 Vice President



 

S-1 








 
 

	 CARMEL MOUNTAIN RANCH
  

	 By:
	 	 WILLIAM LYON HOMES, INC.,
 a General Partner

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 DUXFORD FINANCIAL, INC. 

	
	 By:
	 	 /s/    WADE H. CABLE
        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 Executive Vice President



 

	
	 By:
	 	 /s/    MICHAEL D. GRUBBS
        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 HSP, INC.

	
	 By:
	 	 /s/    RICHARD S.
ROBINSON        


	 Name:
	 	 Richard S. Robinson

	 Title:
	 	 Senior Vice President



 

	
	 By:
	 	 /s/    W. DOUGLASS
HARRIS        


	 Name:
	 	 W. Douglass Harris

	 Title:
	 	 Treasurer



 

S-2 








 

	 MOUNTAIN GATE VENTURES, INC.

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 OX I OXNARD, L.P.
  
 By:   WILLIAM LYON HOMES,
INC.,
          its General
Partner




	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 PH-LP VENTURES

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

S-3 








 

	 PH-RIELLY VENTURES

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 PH VENTURES-SAN JOSE 

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	 PRESLEY CMR, INC.

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

S-4 








 

	 PRESLEY HOMES

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 
 

	 ST. HELENA WESTMINSTER
ESTATES, LLC

	
	 By:
	 	 WILLIAM LYON HOMES,
INC.,
 its Sole Member



 

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

	
	 SYCAMORE CC, INC.




	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President



 

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

S-5 








 

	 WILLIAM LYON SOUTHWEST, INC.

	
	 By:
	 	 /s/    WADE H.
CABLE        


	 Name:
	 	 Wade H. Cable

	 Title:
	 	 President

	
	 By:
	 	 /s/    MICHAEL D.
GRUBBS        


	 Name:
	 	 Michael D. Grubbs

	 Title:
	 	 Senior Vice President



 

S-6 








 

	 U.S. BANK NATIONAL ASSOCIATION, as Trustee



 

	
	 By:
	 	 /s/    FRANK P. LESLIE
III        


	 Name:
	 	 Frank P. Leslie III

	 Title:
	 	 Vice President



 

S-1 








 
EXHIBIT A

 
CUSIP 552075AA1 
$[                            ] 
 
WILLIAM LYON HOMES, INC. 
 
No. 
 
10 3/4% SENIOR NOTE DUE 2013 
 
WILLIAM LYON HOMES, INC., a California corporation (the “Company”), for value received, promises to pay to [            ] or registered assigns the
principal sum of [            ] Dollars on April 1, 2013. 
 
Interest Payment Dates: April 1 and October 1. 
 
Record Dates: March 15 and September 15. 
 
Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set
forth at this place. 
 

A-1 








 
IN WITNESS
WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. 
 

	 WILLIAM LYON HOMES, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
Dated: 
 
Certificate of Authentication

 
This is one of the 10 3/4% Senior Notes due 2013 referred to in the within-mentioned Indenture. 
 

	 U.S. BANK NATIONAL ASSOCIATION,
as Trustee

	
	 By:
	 	

	 	 	 


 
Dated: 
 

A-2 








 
[FORM OF
REVERSE OF NOTE] 
 
WILLIAM LYON HOMES, INC.

 
10 3/4% SENIOR NOTE DUE 2013 
 
1. Interest. WILLIAM LYON HOMES, INC., a California corporation (the “Company”), promises to pay, until the
principal hereof is paid or made available for payment, interest on the principal amount set forth on the face hereof at a rate of 10 3/4% per annum. Interest hereon will accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from and including March 17, 2003 to but excluding the date on which interest
is paid. Interest shall be payable in arrears on each April 1 and October 1, commencing October 1, 2003. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on
overdue interest (to the full extent permitted by law) at a rate of 10 3/4% per annum.

 
2. Method of Payment. The
Company will pay interest hereon (except defaulted interest) to the Persons who are registered Holders at the close of business on March 15 or September 15 next preceding the interest payment date (whether or not a Business Day). Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. If a Holder
has given wire transfer instructions to the Company at least ten Business days prior to the applicable payment date, the Company will make all payments on the Holder’s Notes in accordance with those instructions. Otherwise, payments on the
Notes will be made at the office or agency of the Paying Agent and Registrar unless the Company elects to make interest payments by check mailed to the Holder entitled thereto at the address indicated on the register maintained by the Registrar for
the Notes. 
 
3. Paying Agent and Registrar.
Initially, U.S. Bank National Association (the “Trustee”) will act as a Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without prior notice. Neither the Company nor any of its Affiliates may act as
Paying Agent or Registrar. 
 
4. Indenture.
The Company issued the Notes under an Indenture dated as of March 17, 2003 (the “Indenture”) among the Company, the Guarantors (as defined in the Indenture) and the Trustee. This is one of an issue of Notes of the Company issued, or
to be issued, under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as amended from time to
time. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of them. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture.
The Notes are obligations of the Company limited in aggregate principal amount to $400,000,000, except as provided in Sections 2.08 and 2.09 of the Indenture. 
 

A-3 








 
5.
[Intentionally Omitted] 
 
6. Optional
Redemption. (a) The Company, at its option, may redeem the Notes, in whole or in part, at any time on or after April 1, 2008, at the redemption prices (expressed as percentages of principal amount), set forth below, together, in each case, with
accrued and unpaid interest thereon, if any, to the Redemption Date, if redeemed during the twelve month period beginning on April 1 of each year listed below: 
 

	 Year

	    	 Redemption Price


	 2008
	    	 105.375%

	 2009
	    	 103.583%

	 2010
	    	 101.792%

	 2011 and thereafter
	    	 100.000%


 
(b)
Notwithstanding the foregoing, at any time prior to April 1, 2006, the Company may redeem up to 35% of the aggregate principal amount of the Notes with the net cash proceeds of one or more Qualified Equity Offerings at a redemption price equal to
110.75% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to the Redemption Date; provided that (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 90 days of the date of the closing of any such Qualified Equity Offering. 
 
(c) In the event of a redemption of fewer than all of the Notes, the Trustee shall select the Notes to be
redeemed in compliance with the requirements of the principal national securities exchange, if any, while such Notes are listed, or if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or in such
other manner as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of less than $1,000 shall be redeemed in part. The Notes will be redeemable in whole or in part upon not less than 30 nor more
than 60 days’ prior written notice, mailed by first class mail to a Holder’s last address as it shall appear on the register maintained by the Registrar of the Notes. On and after any redemption date, interest will cease to accrue on the
Notes or portions thereof called for redemption unless the Company shall fail to redeem any such Note. 
 
7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date
to each Holder of Notes to be redeemed at his registered address. On and after the Redemption Date, unless the Company defaults in making the redemption payment, interest ceases to accrue on Notes or portions thereof called for redemption.

 
8. Offers To Purchase. The Indenture
provides that upon the occurrence of a Change of Control or certain Asset Sales or if the Parent’s Consolidated Tangible Net Worth falls below $75.0 million for two consecutive fiscal quarters and subject to further 
 

A-4 








limitations contained therein, the Company shall make an offer to purchase outstanding Notes in accordance
with the procedures set forth in the Indenture. 
 
9. [Intentionally Omitted] 
 
10.
Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay to it any taxes and fees required by law or permitted by the Indenture. The Registrar shall not be required to exchange or register a
transfer of any Note for a period of 15 days immediately preceding the mailing of notice of redemption of Notes to be redeemed or of any Note selected, called or being called for redemption except the unredeemed portion of any Note being redeemed in
part. 
 
11. Persons Deemed Owners. The
registered Holder of this Note may be treated as the owner of this Note for all purposes. 
 
12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee will pay the money back to the Company at its written request. After that,
Holders entitled to the money must look to the Company for payment as general creditors unless an “abandoned property” law designates another Person. 
 
13. Amendment, Supplement, Waiver, Etc. The Company, the Guarantors and the Trustee (if a party thereto) may, without the consent
of the Holders of any outstanding Notes, amend, waive or supplement the Indenture or the Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any change that does not materially and adversely affect the rights of any Holder. Other amendments and modifications of the Indenture or the Notes may be made by the Company,
the Guarantors and the Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of the outstanding Notes, subject to certain exceptions requiring the consent of either the Holders of (i) not less than
two-thirds of the aggregate principal amount of the outstanding Notes or (ii) the Holders of the particular Notes to be affected. 
 
14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Parent and its Restricted Subsidiaries
to, among other things, incur additional Indebtedness, make payments in respect of, or redeem, their Equity Interests or certain Indebtedness, make certain Investments, create or incur Liens, enter into transactions with Affiliates, enter into
agreements restricting the ability of Restricted Subsidiaries to pay dividends and make distributions and on the ability of the Parent and the Company to merge or consolidate with any other Person or transfer all or substantially all of the
Parent’s, the Company’s or any Guarantor’s assets. Such limitations are subject to a number of important qualifications 
 

A-5 








and exceptions. Pursuant to Section 4.04, the Company must annually report to the Trustee on compliance
with such limitations. 
 
15. Successor
Corporation. When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture and the transaction complies with the terms of Article Five of the Indenture, the predecessor corporation will, except as
provided in Article Five, be released from those obligations. 
 
16. Defaults and Remedies. Events of Default are set forth in the Indenture. Subject to certain limitations in the Indenture, if an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company) occurs and is continuing, the Trustee, by written notice to the Issuer, or the Holders of not less than 25% in aggregate principal amount of the outstanding Notes, by written notice to the Issuer and the Trustee, may, declare
all principal of and accrued interest on all Notes to be immediately due and payable and such amounts shall become immediately due and payable. If an Event of Default specified in Section 6.01(7) or (8) occurs with respect to the Company, the
principal amount of and interest on, all Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Holders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium, if any, or interest on the Notes or a default in the observance or performance
of any of the obligations of the Company under Article Five of the Indenture) if it determines that withholding notice is in their best interests. 
 
17. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 
 
18. Discharge. The Company’s obligations pursuant to the Indenture will be discharged, except for obligations pursuant to
certain sections thereof, subject to the terms of the Indenture, upon the payment of all the Notes or upon the irrevocable deposit with the Trustee of United States dollars or U.S. Government Obligations sufficient to pay when due principal of and
interest on the Notes to maturity or redemption, as the case may be. 
 
19. Guarantees. The Note will be entitled to the benefits of certain Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders. 
 

A-6 








 
20.
Authentication. This Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note. 
 
21. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York. The Trustee, the Company, the Guarantor and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to
the Indenture or the Notes. 
 
22.
Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 
 
23. Conflicts with the Indenture. This Note is subject to all terms and conditions of the Indenture. To the extent that any provision of this Note conflicts with the express provisions of the Indenture, the provisions
of the Indenture shall govern. 
 
The Company will
furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: 
 
WILLIAM LYON HOMES, INC. 
4490 Von Karman Avenue 
Newport Beach, CA 92660 
 
Attention: Chief Financial Officer 
 

A-7 








 
ASSIGNMENT

 
I or we assign and transfer this Note to: 
 
(Insert assignee’s social security or tax I.D. number)

 
                                     
                                        
                                        
                                        
                                        
                     
                                     
                                        
                                        
                                        
                                        
                     
                                     
                                        
                                        
                                        
                                        
                     
(Print or type name, address and zip code of assignee) 
 
and irrevocably appoint: 
 
                                     
                                        
                                        
                                        
                                        
                     
                                     
                                        
                                        
                                        
                                        
                     
 
Agent to transfer this Note on the books of the Company. The Agent may substitute another to act for him. 
 

	 Date:
	 	  

	 	 	 	 Your signature:
	 	  


	 	 	 	 	 	 	 	 	 (Sign exactly as your name appears on the other side of this Note)


 
Signature
Guarantee:
                                        

 
SIGNATURE GUARANTEE 
 
Signatures must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 
 

A-8 








 
OPTION OF
HOLDER TO ELECT PURCHASE 
 
If you want to elect to
have all or any part of this Note purchased by the Company pursuant to Section 4.09, Section 4.16 or Section 4.20 of the Indenture, check the appropriate box: 
 

	 	 	  ̈         Section 4.09
	 	  ̈         Section 4.16
	 	  ̈         Section 4.20
	 	 

 
If you
want to have only part of the Note purchased by the Company pursuant to Section 4.09, Section 4.16 or Section 4.20 of the Indenture, state the amount you elect to have purchased: 
 
$                                     
                                        
    
             (multiple of $1,000)

 

	 Date:
	 	  

	 	 	 	 Your signature:
	 	

	 	 	 	 	 	 	 	 	 (Sign exactly as your name appears on the other side of this Note)


 
Signature
Guarantee:                                      
               
 
SIGNATURE GUARANTEE 
 
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program
(“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-9 








 
EXHIBIT B

 
[FORM OF LEGEND FOR GLOBAL NOTE] 
 
Any Global Note authenticated and delivered hereunder shall
bear a legend in substantially the following form: 
 
This Note is a Global Note within the meaning of the indenture hereinafter referred to and is registered in the name of a depository or a nominee of a depository. This Note is not exchangeable for Notes registered in the name of a
person other than the depository or its nominee except in the limited circumstances described in the indenture, and no transfer of this Note (other than a transfer of this Note as a whole by the depository to a nominee of the depository or by a
nominee of the depository to the depository or another nominee of the depository) may be registered except in the limited circumstances described in the Indenture. 
 
Unless this certificate is presented by an authorized representative of the Depository Trust Company (a New
York corporation) (“DTC”) to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of CEDE & CO. or in such other name as it requested by an authorized
representative of DTC (and any payment is made to CEDE & CO. or such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any Person is wrongful inasmuch
as the registered owner hereof, CEDE & CO., has an interest herein. 
 

B-1 








 
EXHIBIT C

 
NOTATION OF GUARANTEE 
 
Each of the undersigned (the “Guarantors”)
hereby jointly and severally unconditionally guarantees, to the extent set forth in the Indenture dated as of March 17, 2003 by and among William Lyon Homes, Inc., as issuer, the Guarantors, as guarantors, and U.S. Bank National Association, as
Trustee (as amended, restated or supplemented from time to time, the “Indenture”), and subject to the provisions of the Indenture, (a) the due and punctual payment of the principal of, and premium, if any, and interest on the Notes,
when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal of, and premium and interest on the Notes, to the extent lawful, and the due and
punctual payment of all Obligations and due and punctual performance of all other obligations of the Issuer to the Holders or the Trustee, all in accordance with the terms set forth in Article Ten of the Indenture, and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or
otherwise. 
 
The obligations of the Guarantors to
the Holders and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture, and reference is hereby made to the Indenture for the precise terms and limitations of this Guarantee. Each Holder
of the Note to which this Guarantee is endorsed, by accepting such Note, agrees to and shall be bound by such provisions. To the extent that any provision of this Guarantee conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern. 
 
[Signatures on
Following Pages] 
 

C-1 








 
IN WITNESS
WHEREOF, each of the Guarantors has caused this Guarantee to be signed by a duly authorized officer. 
 

	 WILLIAM LYON HOMES

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 CALIFORNIA EQUITY FUNDING,
INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 PH-LP VENTURES

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 DUXFORD FINANCIAL, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 SYCAMORE CC, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 

C-2 








 

	 PRESLEY CMR, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 WILLIAM LYON SOUTHWEST, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 PH-REILLY VENTURES

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 MOUNTAIN GATE VENTURES, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 PRESLEY HOMES

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 
 

	 HSP, INC.

	
	 By:
	 	

	 Name:
	 	 
	 Title:
	 	 


 

C-3 








 

	 PH VENTURES-SAN JOSE

	
	 By:
	 	  


	 Name:
	 	 
	 Title:
	 	 


 

	 CARMEL MOUNTAIN RANCH

	
	 By:
	 	 WILLIAM LYON HOMES, INC.,
 its Sole Member



 

	
	 By:
	 	  


	 Name:
	 	 
	 Title:
	 	 


 

	 ST. HELENA WESTMINSTER ESTATES,
LLC

	
	 By:
	 	 WILLIAM LYON HOMES, INC.,
 its Sole Member

	
	 By
	 	  


	 Name:
	 	 
	 Title:
	 	 


 

	 OX I OXNARD, L.P.

	
	 By:
	 	 WILLIAM LYON HOMES, INC.,
 its Sole Member

	
	 By
	 	  


	 Name:
	 	 
	 Title:
	 	 


 

C-4