Exhibit
4.1(b)


FIRST SUPPLEMENTAL
INDENTURE


This First Supplemental Indenture, dated as of June
15, 2006 (this “Supplemental Indenture”), among Kimball Hill Urban
Centers Special Purposes, LLC (the “New Guarantor”), Kimball Hill, Inc.
(together with its successors and assigns, the “Company”), each other
existing Guarantor under the Indenture referred to below (the “Guarantors”),
and U.S. Bank National Association, Trustee under the Indenture referred to
below. Capitalized terms used and not defined herein shall have the same
meanings given in the Indenture unless otherwise indicated.


W I T N E S S E T H:


WHEREAS, the Company and the Trustee have heretofore
executed and delivered an Indenture, dated as of December 19, 2005 (as amended,
restated, supplemented and otherwise modified from time to time, the “Indenture”),
providing for the issuance of 10 1⁄2% Senior Subordinated Notes due 2012 of the
Company (the “Notes”);


WHEREAS, pursuant to Section 4.13 of the Indenture, if
the Company acquires or creates any additional Subsidiary which is a Restricted
Subsidiary, each such Subsidiary shall execute and deliver a supplemental
indenture pursuant to which such Subsidiary shall unconditionally guarantee the
Company’s obligations under the Notes and the Indenture;


WHEREAS, the New Guarantor is a Restricted Subsidiary
of the Company;


WHEREAS, the Company and the Trustee desire to have
the New Guarantor enter into this Supplemental Indenture and agree to guarantee
the obligations of the Company under the Indenture and the Notes and the New
Guarantor desires to enter into this Supplemental Indenture and to guarantee
the obligations of the Company under the Indenture and the Notes as of such
date;


WHEREAS, Section 8.01 of the Indenture provides that
the Company, the Guarantors and the Trustee may, without the written consent of
the Holders of the outstanding Notes, amend the Indenture as provided herein;


WHEREAS, by entering into this Supplemental Indenture,
the Company and the Trustee have consented to amend the Indenture in accordance
with the terms and conditions herein;


WHEREAS, each Guarantor hereby acknowledges and
consents to amend the Indenture in accordance with the terms and conditions
herein; and


WHEREAS, all acts and things prescribed by the
operating agreement of the New Guarantor (as now in effect) necessary to make
this Supplemental Indenture a valid instrument legally binding on the New
Guarantor for the purposes herein expressed, in accordance with its terms, have
been duly done and performed.









 



NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the New Guarantor, the Company and the Trustee mutually covenant
and agree for the equal and ratable benefit of the Holders of the Notes as
follows:


Section 1.                                            Agreement
to be Bound.  The New Guarantor
hereby becomes a party to the Indenture as a Guarantor and as such will have
all of the rights and be subject to all of the obligations and agreements of a
Guarantor under the Indenture.  The New
Guarantor agrees to be bound by all of the provisions of the Indenture
applicable to a Guarantor and to perform all of the obligations and agreements
of a Guarantor under the Indenture.


Section 2.                                            Compliance
with and Fulfillment of Condition of Section 4.13.  The execution and delivery of this
Supplemental Indenture and the Notation of Guarantee by the New Guarantor
(along with such documentation relating thereto as the Trustee shall require)
fulfills the obligations of the Company under Section 4.13 of the Indenture.


Section 3.                                            Ratification
of Indenture; Supplemental Indenture Part of Indenture; Trustee’s Disclaimer.  Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part
of the Indenture for all purposes, and every Holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or
warranty as to the validity or sufficiency of this Supplemental Indenture.


Section 4.                                            Governing
Law.  This
Supplemental 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 5.                                            No
Adverse Interpretation of Other Agreements. 
This Supplemental Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries (other
than the Indenture).  No such indenture,
loan or debt agreement may be used to interpret this Supplemental Indenture or
the Indenture.


Section 6.                                            Successors.  This Supplemental Indenture shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.


Section 7.                                            Separability.  Each provision of this Supplemental 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 Supplemental
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.


Section 8.                                            Counterpart
Originals.  The parties may sign
multiple counterparts of this Supplemental Indenture.  Each signed counterpart shall be deemed an
original, but all of them together represent one and the same agreement.


Section 9.                                            Headings,
etc.  The headings of the Sections of
this Supplemental Indenture have been inserted for convenience of reference
only, are not to be considered a part of



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this Supplemental Indenture
and shall in no way modify or restrict any of the terms or provisions hereof.


* * * * *



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


Kimball Hill Urban Centers Special Purposes, LLC, as a
Guarantor


	
  

  	
  By: 

  	
  /s/ H. Douglas
  Guthrie

  	
   

  
	
   

  	
  Name: 

  	
  H. Douglas Guthrie

  
	
   

  	
  Title:

  	
  President

  
					



 


KIMBALL HILL, INC.


	
  

  	
  By: 

  	
  /s/ David K.
  Hill

  	
   

  
	
   

  	
  Name: 

  	
  David K. Hill

  
	
   

  	
  Title:

  	
  Chairman, Chief Executive Officer and Director

  
					



 


CACTUS HILLS, LLC


KIMBALL HILL HOMES AUSTIN
INVESTMENTS, L.L.C.


KIMBALL HILL HOMES AUSTIN
OPERATIONS, L.L.C.


KIMBALL HILL HOMES DALLAS
INVESTMENTS, L.L.C.


KIMBALL HILL HOMES DALLAS
OPERATIONS, L.L.C.


KIMBALL HILL HOMES
HOUSTON INVESTMENTS, L.L.C.


KIMBALL HILL HOMES
HOUSTON OPERATIONS, L.L.C.


KIMBALL HILL TEXAS INVESTMENT COMPANY, L.L.C.


	
  

  	
  By: 

  	
  /s/ David K.
  Hill

  	
   

  
	
   

  	
  Name: 

  	
  David K. Hill

  
	
   

  	
  Title:

  	
  Manager

  
					



 


EAST LAKE PARK, INC.


KIMBALL HILL FAR EAST
DETROIT, LLC


KIMBALL HILL STATEWAY, INC.


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President and Treasurer

  
					



 



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KH FINANCIAL HOLDING
COMPANY


KHH TEXAS TRADING COMPANY
L.P.


KIMBALL HILL HOMES
AUSTIN, L.P.


KIMBALL HILL HOMES
CALIFORNIA, INC.


KIMBALL HILL HOMES
DALLAS, L.P.


KIMBALL HILL HOMES
FLORIDA, INC.


KIMBALL HILL HOMES
HOUSTON, L.P.


KIMBALL HILL HOMES
ILLINOIS, LLC


KIMBALL HILL HOMES NEVADA,
INC.


KIMBALL HILL HOMES OHIO,
INC.


KIMBALL HILL HOMES
OREGON, INC.


KIMBALL HILL HOMES REALTY
FLORIDA, INC.


KIMBALL HILL HOMES SAN
ANTONIO, L.P.


KIMBALL HILL HOMES TEXAS,
INC.


KIMBALL HILL HOMES
WASHINGTON, INC.


KIMBALL HILL HOMES
WISCONSIN, INC.


NATIONAL CREDIT AND
GUARANTY CORPORATION


RIVER OAKS REALTY, L.P.


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


18TH AND PEORIA, LLC


By:                            Kimball
Hill Suburban Centers, L.L.C., its manager


By:                            Kimball
Hill, Inc., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Senior Vice President, Finance

  
					



 



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KIMBALL HILL SUBURBAN
CENTERS, L.L.C.


KIMBALL HILL URBAN
CENTERS, L.L.C.


THE GLENS AT WESTLAKE, L.L.C.


By:                            Kimball
Hill, Inc., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Senior Vice President, Finance

  
					



 


KIMBALL HILL URBAN
CENTERS CHICAGO ONE, L.L.C.


KIMBALL HILL URBAN CENTERS CHICAGO TWO, L.L.C.


By:                            Kimball
Hill Urban Centers, L.L.C., its
manager


By:                            Kimball
Hill, Inc., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Senior Vice President, Finance

  
					



 


BRIDLE RIDGE LIMITED
PARTNERSHIP


PARKVIEW LIMITED
PARTNERSHIP


RIVER POINTE LIMITED
PARTNERSHIP


SONATA AT MORADA RANCH
LIMITED PARTNERSHIP


WINDMILL PARK LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes California, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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KIMBALL HILL BELLEVUE
RANCH, LLC


KIMBALL HILL REFLECTIONS,
LLC


KIMBALL HILL SHELDON
LAKES, LLC


KIMBALL HILL VILLAGES, LLC


By:                            Kimball
Hill Homes California, Inc., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


KIMBALL HILL CHADWICK
FARMS LIMITED PARTNERSHIP


KIMBALL WEST FRISCO LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Dallas, L.P., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


KIMBALL HILL CALUSA PALMS
LIMITED PARTNERSHIP


KIMBALL HILL MARBELLA ESTATES LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Florida, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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INDIAN TRAILS LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Houston, L.P., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


KIMBALL HILL TX PROPERTIES, LLC


By:                            Kimball
Hill Homes Houston, L.P., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


ASTOR PLACE LIMITED
PARTNERSHIP


BOLINGBROOK LIMITED
PARTNERSHIP


EDGEWATER LIMITED
PARTNERSHIP


HUNTINGTON CHASE LIMITED
PARTNERSHIP


LEGEND LAKES LIMITED
PARTNERSHIP


THE GLEN TOWNHOMES
LIMITED PARTNERSHIP


THE HAMILTON PLACE
PARTNERSHIP


WATERFORD LIMITED
PARTNERSHIP


WHISPERING MEADOW LIMITED
PARTNERSHIP


WHITE OAK LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Illinois, LLC, its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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KH INGHAM PARK SOUTH, LLC


KH SRAV II, LLC


By:                            Kimball
Hill Homes Illinois, LLC, its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


KIMBALL HILL CENTENNIAL
HEIGHTS LIMITED PARTNERSHIP


KIMBALL HILL
HEATHERS/CAPAROLA LIMITED PARTNERSHIP


KIMBALL MOUNTAIN FIRST LIMITED                 PARTNERSHIP


By:                            Kimball
Hill Homes Nevada, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


KIMBALL COVE LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Texas, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


RIVER OAKS HOMES, L.L.P.


By:                            Kimball
Hill Homes Texas, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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GABLES AT HIDDENBROOK LIMITED PARTNERSHIP


By:                            Kimball
Hill Homes Washington, Inc., its general partner


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


PARK SHORE, L.L.C.


By:                            Kimball
Hill Homes Wisconsin, Inc., its manager


	
  

  	
  By: 

  	
  /s/ Hal H.
  Barber

  	
   

  
	
   

  	
  Name: 

  	
  Hal H. Barber

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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U.S. BANK NATIONAL ASSOCIATION, as Trustee


	
  

  	
  By: 

  	
  /s/ Richard
  Prokosch

  	
   

  
	
   

  	
  Name: 

  	
  Richard Prokosch

  
	
   

  	
  Title:

  	
  Vice President

  
					



 



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