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Exhibit 4.5  




 BEAZER HOMES USA, INC. AND THE SUBSIDIARY GUARANTORS PARTY HERETO  


 8-5/8% Senior Notes Due 2011  




 First Supplemental Indenture  


 Dated as of May 21, 2001  




 U.S. BANK TRUST NATIONAL ASSOCIATION,

as Trustee  







 


	ARTICLE ONE
	

The 8-5/8% Senior Notes Due 2011
	

Section 1.01.	
 	

Designation of 8-5/8% Senior Notes Due 2011.	
 	

2
	Section 1.02.	 	Interest.	 	2
	Section 1.03.	 	Redemption.	 	2
	Section 1.04.	 	Maturity.	 	2
	Section 1.05.	 	Other Terms of the Notes.	 	2
	

ARTICLE TWO
	

Certain Definitions
	

ARTICLE THREE
	

Covenants
	

Section 3.01.	
 	

Disposition of Proceeds of Asset Sales.	
 	

17
	Section 3.02.	 	Limitations on Restricted Payments.	 	19
	Section 3.03.	 	Limitations on Additional Indebtedness.	 	21
	Section 3.04.	 	Restrictions on Restricted Subsidiary Indebtedness.	 	21
	Section 3.05.	 	Limitations and Restrictions on Issuance of Capital Stock of Restricted Subsidiaries.	 	22
	Section 3.06.	 	Change of Control.	 	22
	Section 3.07.	 	Limitations on Transactions with Stockholders and Affiliates.	 	24
	Section 3.08.	 	Limitations on Liens.	 	24
	Section 3.09.	 	Limitations on Restrictions on Distributions from Restricted Subsidiaries.	 	24
	Section 3.10.	 	Maintenance of Consolidated Tangible Net Worth.	 	25
	Section 3.11.	 	Limitations on Mergers and Consolidations.	 	27
	Section 3.12.	 	Reports.	 	28
	Section 3.13.	 	Subsidiary Guarantees.	 	28
	

ARTICLE FOUR
	

Subsidiary Guarantees
	

Section 4.01.	
 	

Subsidiary Guarantees of Notes.	
 	

29
	Section 4.02.	 	Execution and Delivery of Subsidiary Guarantee.	 	30
	Section 4.03.	 	Additional Subsidiary Guarantors.	 	30
	Section 4.04.	 	Release of a Subsidiary Guarantor.	 	31
	Section 4.05.	 	Waiver of Subrogation.	 	31
	

ARTICLE FIVE
	

Miscellaneous
	

Section 5.01.	
 	

Events of Default.	
 	

32
	Section 5.02.	 	Amendment, Supplement and Waiver.	 	33
	Section 5.03.	 	Governing Law.	 	34
	Section 5.04.	 	No Adverse Interpretation of Other Agreements.	 	34
	Section 5.05.	 	Successors and Assigns.	 	34



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	Section 5.06.	 	Duplicate Originals.	 	35
	Section 5.07.	 	Severability.	 	35
	

Exhibit A	
 	

Form of Note	
 	

 
	

Exhibit B	
 	

Form of Subsidiary Guarantee	
 	

 




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    FIRST
SUPPLEMENTAL INDENTURE dated as of May 21, 2001 (this "Supplemental Indenture"), to the Indenture dated as of
May 21, 2001 (as amended, modified or supplemented from time to time in accordance therewith, the "Indenture"), by and between BEAZER HOMES
USA, INC., a Delaware corporation (the "Company"), and U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee (the
"Trustee"). 


    Each
party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of Notes (as defined herein): 


    WHEREAS,
the Company and the Trustee have duly authorized the execution and delivery of the Indenture to provide for the issuance from time to time of debt securities (the
"Securities") to be issued in one or more series as in the Indenture provided; 


    WHEREAS,
the Company and the Subsidiary Guarantors desire and have requested the Trustee to join them in the execution and delivery of this Supplemental Indenture in order to
establish and provide for the issuance by the Company of a series of Securities designated as its 8-5/8% Senior Notes Due 2011, substantially in the form attached hereto as Exhibit A (the
"Notes"), on the terms set forth herein; 


    WHEREAS,
the Company's obligations under the Notes shall be unconditionally guaranteed by the Subsidiary Guarantors on the terms set forth herein; 


    WHEREAS,
Section 3.01 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee for such purpose provided certain conditions
are met; 


    WHEREAS,
the conditions set forth in the Indenture for the execution and delivery of this Supplemental Indenture have been complied with; and 



    WHEREAS,
all things necessary to make this Supplemental Indenture a valid agreement of the Company, the Subsidiary Guarantors and the Trustee, in accordance with its terms, and a
valid amendment of, and supplement to, the Indenture have been done; 


    NOW,
THEREFORE: 


    In
consideration of the premises and the purchase and acceptance of the Notes by the holders thereof the Company and the Subsidiary Guarantors mutually covenant and agree with the
Trustee, for the equal and ratable benefit of the holders, that the Indenture is supplemented and amended, to the extent expressed herein, as follows: 





 
ARTICLE ONE  


 The 8-5/8% Senior Notes Due 2011  


    Section 1.01. Designation of 8-5/8% Senior Notes Due 2011. 


    The
changes, modifications and supplements to the Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes, which
shall not be limited in aggregate principal amount, and shall not apply to any other Securities that may be issued under the Indenture unless a supplemental indenture with respect to such other
Securities specifically incorporates such changes, modifications and supplements. Pursuant to this Supplemental Indenture, there is hereby created and designated a series of Securities under the
Indenture entitled "8-5/8% Senior Notes Due 2011." The Notes shall be in the form of Exhibit A hereto. The Notes shall be guaranteed by the
Subsidiary Guarantors as provided herein. The Notes may bear an appropriate legend regarding original issue discount for federal income tax purposes. Subject to the terms herein, including compliance
with Section 3.03 hereof, the Company may, at its option, without consent from the Holders, issue additional Notes from time to time. 


    Section 1.02.  Interest. 


    The
Notes shall bear interest at the rate set forth in the Notes. Interest on the Notes shall be payable to the persons in whose name the Notes are registered at the close of business
on the record date for such interest payment. The date from which interest shall accrue for each Note shall be the most recent to occur of May 21, 2001 or the most recent Interest Payment Date. 


    Section 1.03.
Redemption. 


    The
Company, at its option, may redeem the Notes in accordance with the provisions of and at the Redemption Prices set forth in the Notes and in accordance with the provisions of the
Indenture, including, without limitation, Article Eleven thereof. 


    Section 1.04.
Maturity. 


    The
date on which the principal of the Notes is payable, unless accelerated pursuant to the terms hereof, shall be May 15, 2011. 


    Section 1.05.
Other Terms of the Notes. 


    Without
limiting the foregoing provisions of this Article One, the terms of the Notes shall be as set forth in the form of Notes set forth in Exhibit A hereto and as provided
in the Indenture. 


    The
Notes shall be payable and may be presented for payment, purchase, conversion, registration of transfer and exchange, without service charge, at the office of the Company
maintained for such purpose in New York, New York, which shall initially be the office or agency of the Trustee. 


ARTICLE TWO  


 Certain Definitions  


    The following terms have the meanings set forth below in this Supplemental Indenture. Capitalized terms used but not defined herein have the meanings ascribed
to such terms in the Indenture. To the extent terms defined herein differ from the Indenture the terms defined herein will govern. 


    "Acquisition Indebtedness" means Indebtedness of any Person and its Subsidiaries existing at the time such Person became a Subsidiary
of the Company (or such Person is merged with or into the Company or one of the Company's Subsidiaries) or assumed in connection with the acquisition of assets from any such Person, including, without
limitation, Indebtedness Incurred in connection with, or in contemplation of, (a) such Person being merged with or into or becoming a Subsidiary of the 


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Company or one of its Subsidiaries (but excluding Indebtedness of such Person which is extinguished, retired or repaid in connection with such Person being merged with or into or becoming a Subsidiary
of the Company or one of its Subsidiaries) or (b) such acquisition of assets from any such Person. 



    "Affiliate" of any Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes hereof, each executive officer and director of the Company and each Subsidiary of the Company will be an Affiliate of the Company. In addition, for
purposes hereof, control of a Person means 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. Notwithstanding the foregoing, the term "Affiliate" will not include, with respect to the Company or any Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company, any
Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company. 


    "Agent" means any Registrar, Paying Agent, or co-Registrar. 


    "Asset Sale" for any Person means the sale, lease, conveyance or other disposition (including, without limitation, by merger,
consolidation or sale and leaseback transaction, and whether by operation of law or otherwise) of any of that Person's assets (including, without limitation, the sale or other disposition of Capital
Stock of any Subsidiary of such Person, whether by such Person or such Subsidiary), whether owned on the date hereof or subsequently acquired in one transaction or a series of related transactions, in
which such Person and/or its Subsidiaries receive cash and/or other consideration (including, without limitation, the unconditional assumption of Indebtedness of such Person and/or its Subsidiaries)
having an aggregate Fair Market Value of $500,000 or more as to each such transaction or series of related transactions; provided, however, that 



    (i)  a
transaction or series of related transactions that results in a Change of Control will not constitute an Asset Sale, 


    (ii)  sales
of homes in the ordinary course of business will not constitute Asset Sales, 


    (iii)  sales,
leases, conveyances or other dispositions, including, without limitation, exchanges or swaps of real estate in the ordinary course of business, for
development of the Company's or any of its Subsidiaries' projects, will not constitute Asset Sales, 


    (iv)  sales,
leases, sale-leasebacks or other dispositions of amenities, model homes and other improvements at the Company's or its Subsidiaries' projects
in the ordinary course of business will not constitute Asset Sales, and 



    (v)  transactions
between the Company and any of its Restricted Subsidiaries which are Wholly Owned Subsidiaries, or among such Restricted Subsidiaries which are Wholly
Owned Subsidiaries of the Company, will not constitute Asset Sales. 




    "Bank Credit Facility" means the credit facility among the Company, as borrower thereunder, the Subsidiary Guarantors and the financial
institutions named therein, as such facility may be amended, restated, supplemented or otherwise modified from time to time, and includes any facility extending the maturity of, or refinancing or
restructuring (including, without limitation, the inclusion of additional borrowers thereunder that are Unrestricted Subsidiaries) all or any portion of, the Indebtedness under such facility or any
successor facilities and includes any facility with one or more lenders refinancing or replacing all or any portion of the Indebtedness under such facility or any successor facilities. 


    "Bankruptcy Law" means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors. 


    "Business Day" means any day other than a Legal Holiday. 



    "Capital Stock" of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable),
participations or other equivalents of or interests in (however 


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designated and whether voting or non-voting) the equity (which includes, but is not limited to, common stock, preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities that are convertible into, or exchangeable for, such equity). 



    "Capitalized Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation will be the capitalized amount thereof determined in accordance with GAAP. 


    "Change of Control" means any of the following: 



    (i)  the
sale, lease, conveyance or other disposition of all or substantially all of the Company's assets as an entirety or substantially as an entirety to any Person
or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) in one or a series of transactions; provided that a transaction where the holders of all classes of Common
Equity of the Company immediately prior to such transaction own, directly or indirectly, 50 percent or more of the aggregate voting power of all classes of Common Equity of such Person or group
immediately after such transaction will not be a Change of Control; 


    (ii)  the
acquisition by the Company and/or any of its Subsidiaries of 50 percent or more of the aggregate voting power of all classes of Common Equity of the
Company in one transaction or a series of related transactions; 


    (iii)  the
liquidation or dissolution of the Company; provided that a liquidation or dissolution of the Company which is
part of a transaction or series of related transactions that does not constitute a Change of Control under the "provided" clause of clause (i) above will not constitute a Change of Control
under this clause (iii); 


    (iv)  any
transaction or a series of related transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection
with, (a) any Person, including a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 50 percent or more of the aggregate voting power of all classes of Common Equity of the Company or of any Person that possesses "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50 percent or more of the aggregate voting power of all classes of Common Equity of
the Company or (b) less than 50 percent (measured by the aggregate voting power of all classes) of the Common Equity of the Company being registered under Section 12(b) or 12(g)
of the Exchange Act; or 


    (v)  a
majority of the Board of Directors of the Company not being comprised of Continuing Directors. 




    "Commission" means the U.S. Securities and Exchange Commission. 


    "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (i) vote in the election of
directors of such Person, or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the
management and policies of such Person. 


    "Consolidated Cash Flow Available for Fixed Charges" of the Company and its Restricted Subsidiaries means for any period the sum of the
amounts for such period of 



    (i)  Consolidated
Net Income, plus


    (ii)  Consolidated
Income Tax Expense (without regard to income tax expense or credits attributable to extraordinary and nonrecurring gains or losses on Asset Sales),  plus



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    (iii)  Consolidated Interest Expense, plus


    (iv)  all
depreciation, and, without duplication, amortization (including, without limitation, capitalized interest amortized to cost of sales),  plus


    (v)  all
other noncash items reducing Consolidated Net Income during such period, 




minus all other noncash items increasing Consolidated Net Income during such period, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in accordance with GAAP. 


    "Consolidated Fixed Charge Coverage Ratio" of the Company means, with respect to any determination date, the ratio of
(i) Consolidated Cash Flow Available for Fixed Charges of the Company for the prior four full fiscal quarters for which financial results have been reported immediately preceding the
determination date, to (ii) the aggregate Consolidated Interest Incurred of the Company for the prior four full fiscal quarters for which financial results have been reported immediately
preceding the determination date; provided that 



    (1)  with
respect to any Indebtedness Incurred during, and remaining outstanding at the end of, such four full fiscal quarter period, such Indebtedness will be assumed
to have been Incurred as of the first day of such four full fiscal quarter period, 


    (2)  with
respect to Indebtedness repaid (other than a repayment of revolving credit obligations repaid solely out of operating cash flows) during such four full fiscal
quarter period, such Indebtedness will be assumed to have been repaid on the first day of such four full fiscal quarter period, 


    (3)  with
respect to the Incurrence of any Acquisition Indebtedness, such Indebtedness and any proceeds therefrom will be assumed to have been Incurred and applied as
of the first day of such four full fiscal
quarter period, and the results of operations of any Person and any Subsidiary of such Person that, in connection with or in contemplation of such Incurrence, becomes a Subsidiary of the Company or is
merged with or into the Company or one of the Company's Subsidiaries or whose assets are acquired, will be included, on a pro forma basis, in the calculation of the Consolidated Fixed Charge Coverage
Ratio as if such transaction had occurred on the first day of such four full fiscal quarter period, and 


    (4)  with
respect to any other transaction pursuant to which any Person becomes a Subsidiary of the Company or is merged with or into the Company or one of the
Company's Subsidiaries or pursuant to which any Person's assets are acquired, such Consolidated Fixed Charge Coverage Ratio shall be calculated on a pro forma basis as if such transaction had occurred
on the first day of such four full fiscal quarter period, but only if such transaction would require a pro forma presentation in financial statements prepared pursuant to Rule 11-02
of Regulation S-X under the Securities Act. 




    "Consolidated Income Tax Expense" of the Company for any period means the income tax expense of the Company and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 


    "Consolidated Interest Expense" of the Company for any period means the Interest Expense of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP. 


    "Consolidated Interest Incurred" of the Company for any period means the Interest Incurred of the Company and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. 


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    "Consolidated Net Income" of the Company for any period means the aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that there will be excluded from such net income (to
the extent otherwise included therein), without duplication: 



    (i)  the
net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person (including, without limitation, an Unrestricted Subsidiary) other
than the Company or any Restricted Subsidiary has an ownership interest, except to the extent that any such income has actually been received by the Company or any Restricted Subsidiary in the form of
cash dividends or similar cash distributions during such period, or in any other form but converted to cash during such period, 



    (ii)  except
to the extent includible in Consolidated Net Income pursuant to the foregoing clause (i), 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 with or into or consolidated with the Company or any of its Restricted Subsidiaries or (b) the assets of
such Person are acquired by the Company or any of its Restricted Subsidiaries, 


    (iii)  the
net income of any Restricted Subsidiary to the extent that (but only so long as) 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 Restricted Subsidiary during such period, 


    (iv)  in
the case of a successor to the Company by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or
transfer of assets and 


    (v)  the
gains (but not losses) realized during such period by the Company or any of its Restricted Subsidiaries resulting from (a) the acquisition of securities
issued by the Company or extinguishment of Indebtedness of the Company or any of its Restricted Subsidiaries, (b) Asset Sales by the Company or any of its Restricted Subsidiaries and
(c) other extraordinary items realized by the Company or any of its Restricted Subsidiaries. 




    Notwithstanding
the foregoing, in calculating Consolidated Net Income, the Company will be entitled to take into consideration the tax benefits associated with any loss described in
clause (v) of the preceding sentence, but only to the extent such tax benefits are actually recognized by the Company or any of its Restricted Subsidiaries during such period;  provided, further,
that there will be included in such net income, without duplication, the net income of any Unrestricted Subsidiary to the extent such
net income is actually received by the Company or any of its Restricted Subsidiaries in the form of cash dividends or similar cash distributions during such period, or in any other form but converted
to cash during such period. 


    "Consolidated Tangible Assets" of the Company as of any date means the total amount of assets of the Company and its Restricted
Subsidiaries (less applicable reserves) on a consolidated basis at the end of the fiscal quarter immediately preceding such date, as determined in accordance with GAAP, less: (i) Intangible
Assets and (ii) appropriate adjustments on account of minority interests of other Persons holding equity investments in Restricted Subsidiaries, in the case of each of clauses (i) and
(ii) above, as reflected on the consolidated balance sheet of the Company and its Restricted Subsidiaries as of the end of the fiscal quarter immediately preceding such date. 


    "Consolidated Tangible Net Worth" of the Company as of any date means the stockholders' equity (including any Preferred Stock that is
classified as equity under GAAP, other than Disqualified Stock) of the Company and its Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, plus any amount of unvested deferred compensation included, in accordance with GAAP, as an offset to stockholders' 


6





 


equity, less the amount of Intangible Assets reflected on the consolidated balance sheet of the Company and its Restricted Subsidiaries as of the end of the fiscal quarter immediately preceding such
date. 


    "Continuing Director" means at any date a member of the Board of Directors of the Company who 



    (i)  was
a member of the Board of Directors of the Company on the initial issuance date of the Notes hereunder or 



    (ii)  was
nominated for election or elected to the Board of Directors of the Company with the affirmative vote of at least a majority of the directors who were
Continuing Directors at the time of such nomination or election. 




    "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. 


    "Default" means any event, act or condition that is, or after notice or the passage of time, or both, would be, an Event of Default. 



    "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the Notes; provided that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a change of control occurring
prior to the final maturity of the Notes will not constitute Disqualified Stock if the change of control provisions applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than those contained in Section 3.06 hereof and such Capital Stock specifically provides that the Company will not repurchase or redeem (or be required to repurchase or redeem)
any such Capital Stock pursuant to such provisions prior to the Company's repurchase of Notes pursuant to Section 3.06 hereof. 


    "Disqualified Stock Dividend" of any Person means, for any dividend payable with regard to Disqualified Stock issued by such Person,
the amount of such dividend multiplied by a fraction, the numerator of which is one and the denominator of which is one minus the maximum statutory combined federal, state and local income tax rate
(expressed as a decimal number between 1 and 0) then applicable to such Person. 


    "Equity Offering" means a public or private equity offering by the Company for cash of Capital Stock, other than an offering of
Disqualified Stock. 


    "Event of Default" has the meaning set forth in Section 5.01 hereof. 


    "Exchange Act" means the Securities Exchange Act of 1934. 


    "Existing Indebtedness" means all of the Indebtedness of the Company and its Subsidiaries that is outstanding on the date hereof. 



    "Fair Market Value" with respect to any asset or property means the sale value that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy. Fair Market Value shall be determined by the Board of Directors of the
Company acting in good faith and shall be evidenced by a board resolution (certified by the Secretary or Assistant Secretary of the Company) delivered to the Trustee. 



    "GAAP" means generally accepted accounting principles set forth in the opinions and interpretations of the Accounting Principles Board
of the American Institute of Certified Public 


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Accountants and statements and interpretations 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 on the date hereof. 


    "Hedging Obligations" of any Person means the obligations of such Person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement relating to interest rates or foreign exchange rates. 


    "Holder" means a Person in whose name a Note is registered in the Security Register. 


    "Incur" means to, directly or indirectly, create, incur, assume, guarantee, extend the maturity of, or otherwise become liable with
respect to, any Indebtedness; provided, however, that neither the accrual of interest (whether such interest is payable in cash or kind) nor the
accretion of original issue discount shall be considered an Incurrence of Indebtedness. 


    "Indebtedness" of any Person at any date means, without duplication, 



    (i)  all
indebtedness 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), 


    (ii)  all
obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, 


    (iii)  all
fixed obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit issued for the benefit of, or surety and performance bonds issued by, such Person in the ordinary course of business, 


    (iv)  all
obligations of such Person with respect to Hedging Obligations (other than those that fix or cap the interest rate on variable rate Indebtedness otherwise
permitted hereunder or that fix the exchange rate in connection with Indebtedness denominated in a foreign currency and otherwise permitted hereunder), 



    (v)  all
obligations of such Person to pay the deferred and unpaid purchase price of property or services, including, without limitation, all conditional sale
obligations of such Person and all obligations under any title retention agreement; provided, however, that (a) any obligations described in this
clause (v) which are non-interest bearing and which have a maturity of not more than six months from the date of Incurrence thereof shall not constitute Indebtedness and
(b) trade payables and accrued expenses Incurred in the ordinary course of business shall not constitute Indebtedness, 



    (vi)  all
Capitalized Lease Obligations of such Person, 


    (vii)  all
Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, 


    (viii)  all
Indebtedness of others guaranteed by, or otherwise the liability of, such Person to the extent of such guarantee or liability, and 


    (ix)  all
Disqualified Stock issued by such Person (the amount of Indebtedness represented by any Disqualified Stock will equal the greater of the voluntary or
involuntary liquidation preference plus accrued and unpaid dividends). 




    The
amount of Indebtedness of any Person at any date will be 



    (a)  the
outstanding balance at such date of all unconditional obligations as described above, 



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    (b)  the maximum liability of such Person for any contingent obligations under clause (viii) above and 



    (c)  in
the case of clause (vii) (if the Indebtedness referred to therein is not assumed by such Person), the lesser of the (A) Fair Market Value of all
assets subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (B) amount of the Indebtedness secured. 




    "Independent Financial Advisor" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in
the reasonable judgment of the Company's Board of Directors, (i) qualified to perform the task for which it has been engaged, and (ii) disinterested and independent, in a direct and
indirect manner, of the parties to the Affiliate Transaction with respect to which such firm has been engaged. 



    "Intangible Assets" of the Company means all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights and all other items which would be treated as intangibles on the consolidated balance sheet of the Company and its Restricted Subsidiaries prepared
in accordance with GAAP. 


    "Interest Expense" of any Person for any period means, without duplication, the aggregate amount of (i) interest which, in
conformity with GAAP, would be set opposite the caption "interest expense" or any like caption on an income statement for such Person (including, without limitation, imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit securing financial obligations and bankers' acceptance financing, the net costs associated with Hedging Obligations, amortization of other financing fees
and expenses, the interest portion of any deferred payment obligation, amortization of discount or premium, if any, and all other noncash interest expense other than interest and other charges
amortized to cost of sales) and includes, with respect to the Company and its Restricted Subsidiaries, without duplication (including duplication of the foregoing items), all interest amortized to
cost of sales for such period, and (ii) the amount of Disqualified Stock Dividends recognized by the Company on any Disqualified Stock whether or not paid during such period. 



    "Interest Incurred" of any Person for any period means, without duplication, the aggregate amount of (i) interest which, in
conformity with GAAP, would be set opposite the caption "interest expense" or any like caption on an income statement for such Person (including, without limitation, imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers' acceptance financing, the net
costs associated with Hedging Obligations, amortization of other financing fees and expenses, the interest portion of any deferred payment obligation, amortization of discount or premium, if any, and
all other noncash interest expense other than interest and other charges amortized to cost of sales) and includes, with respect to the Company and its Restricted Subsidiaries, without duplication
(including duplication of the foregoing items), all interest capitalized for such period, all interest attributable to discontinued operations for such period to the extent not set forth on the income
statement under the caption "interest expense" or any like caption, and all interest actually paid by the Company or a Restricted Subsidiary under any guarantee of Indebtedness (including, without
limitation, a guarantee of principal, interest or any combination thereof) of any other Person during such period and (ii) the amount of Disqualified Stock Dividends recognized by the Company
on any Disqualified Stock whether or not declared during such period. 


    "Investments" of any Person means all (i) investments by such Person in any other Person in the form of loans, advances or
capital contributions, (ii) guarantees of Indebtedness or other obligations of any other Person by such Person, (iii) purchases (or other acquisitions for consideration) by such Person
of Indebtedness, Capital Stock or other securities of any other Person and (iv) other items that 


9





 


would be classified as investments on a balance sheet of such Person determined in accordance with GAAP. 


    "Issue Date" means the date of original issuance of the Notes. 


    "Joint Venture Entity" means the joint venture between the Company and Corporacion GEO S.A. de C.V. 


    "Legal Holiday" means Saturday, Sunday or a day on which banking institutions in New York, New York, Chicago, Illinois, or at a place
of payment are authorized or obligated by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment shall be made at that place on the
next succeeding day that is not a Legal Holiday. 


    "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or other similar encumbrance of any kind
upon or in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including, without limitation, 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). 


    "Material Subsidiary" means any Subsidiary of the Company which accounted for five percent or more of the Consolidated Tangible Assets
or Consolidated Cash Flow Available for Fixed Charges of the Company on a consolidated basis for the fiscal year ending immediately prior to any Default or Event of Default. 


    "Net Proceeds" means 



    (i)  cash
(in U.S. dollars or freely convertible into U.S. dollars) received by the Company or any Restricted Subsidiary from an Asset Sale net of 



    (a)  all
brokerage commissions, investment banking fees and all other fees and expenses (including, without limitation, fees and expenses of counsel, financial
advisors, accountants and investment bankers) related to such Asset Sale, 


    (b)  provisions
for all income and other taxes measured by or resulting from such Asset Sale of the Company or any of its Restricted Subsidiaries, 


    (c)  payments
made to retire Indebtedness that was Incurred in accordance with the terms hereof and that either (1) is secured by a Lien incurred in accordance
with the terms hereof on the property or assets sold or (2) is required in connection with such Asset Sale to the extent actually repaid in cash, 


    (d)  amounts
required to be paid to any Person (other than the Company or a Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale
and 


    (e)  appropriate
amounts to be provided by the Company or any Restricted Subsidiary thereof, as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary thereof, as the case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations or post-closing purchase price
adjustments associated with such Asset Sale, all as reflected in an Officers' Certificate delivered to the Trustee, and 




    (ii)  all
noncash consideration received by the Company or any of its Restricted Subsidiaries from such Asset Sale upon the liquidation or conversion of such
consideration into cash, without duplication, net of all items enumerated in subclauses (a) through (e) of clause (i) hereof. 



10





 

    "Non-Recourse Indebtedness" with respect to any Person means Indebtedness of such Person for which (i) 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 (ii) no other assets of such Person may be
realized upon in collection of principal or interest on such Indebtedness. 


    "Officer" means the chairman, the chief executive officer, the president, the chief financial officer, the chief operating officer, the
chief accounting officer, the treasurer, or any assistant treasurer, the controller, the secretary, any assistant secretary or any vice president of a Person. 



    "Officers' Certificate" means a certificate signed by two Officers, one of whom must be the Person's chief executive officer, chief
operating officer, chief financial officer or chief accounting officer. 


    "Paying Agent" means any office or agency where Notes and the Subsidiary Guarantees may be presented for payment. 


    "Permitted Investments" of any Person means Investments of such Person in 



    (i)  direct
obligations of the United States or any agency thereof or obligations guaranteed by the United States or any agency thereof, in each case maturing within
180 days of the date of acquisition thereof, 


    (ii)  certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by a bank, trust company or savings and loan association which
is organized under the laws of the United States or any state thereof having capital, surplus and undivided profits aggregating in excess of $250 million and a Keefe Bank Watch Rating of C or
better, 


    (iii)  certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by a bank, trust company or savings and loan association
organized under the laws of the United States or any state thereof other than banks, trust companies or savings and loan associations satisfying the criteria in (ii) above,  provided that the
aggregate amount of all certificates of deposit issued to the Company at any one time by such bank, trust company or savings and loan
association will not exceed $100,000, 


    (iv)  commercial
paper given the highest rating by two established national credit rating agencies and maturing not more than 180 days from the date of
acquisition thereof, 


    (v)  repurchase
agreements or money-market accounts which are fully secured by direct obligations of the United States or any agency thereof and 


    (vi)  in
the case of the Company and its Subsidiaries, any receivables or loans taken by the Company or a Subsidiary in connection with the sale of any asset otherwise
permitted hereunder. 




    "Permitted Liens" means 



    (i)  Liens
for taxes, assessments or governmental charges or claims that either (a) are not yet delinquent or (b) are being contested in good faith by
appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, 


    (ii)  statutory
Liens of landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other Liens imposed by law and arising in the
ordinary course of business and with respect to amounts that, to the extent applicable, either (a) are not yet delinquent or (b) are being contested in good faith by appropriate
proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, 



11





 


    (iii)  Liens (other than any Lien imposed by the Employee Retirement Income Security Act of 1974, as amended) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and other types of social security, 


    (iv)  Liens
incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress payments, government
contracts and other obligations of like nature (exclusive of obligations for the payment of borrowed money), in each case incurred in the ordinary course of business of the Company and its
Subsidiaries, 


    (v)  attachment
or judgment Liens not giving rise to a Default or an Event of Default and which are being contested in good faith by appropriate proceedings, 


    (vi)  easements,
rights-of-way, restrictions and other similar charges or encumbrances not materially interfering with the ordinary course of
business of the Company and its Subsidiaries, 


    (vii)  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 Company and its Subsidiaries or the value of such real property for the purpose of such business, 


    (viii)  leases
or subleases granted to others not materially interfering with the ordinary course of business of the Company and its Subsidiaries, 


    (ix)  purchase
money mortgages (including, without limitation, Capitalized Lease Obligations and purchase money security interests), 


    (x)  Liens
securing Refinancing Indebtedness; provided that such Liens only extend to assets which are similar to the
type of assets securing the Indebtedness being refinanced and such refinanced Indebtedness was previously secured by such similar assets, 


    (xi)  Liens
securing Indebtedness of the Company and its Restricted Subsidiaries permitted to be Incurred hereunder;  provided that the aggregate amount of Indebtedness secured by Liens (other than Non-Recourse
Indebtedness secured by Liens) will not exceed
40 percent of Consolidated Tangible Assets, 


    (xii)  any
interest in or title of a lessor to property subject to any Capitalized Lease Obligations incurred in compliance with the provisions hereof, 


    (xiii)  Liens
existing on the date hereof, including, without limitation, Liens securing Existing Indebtedness, 


    (xiv)  any
option, contract or other agreement to sell an asset; provided such sale is not otherwise prohibited by the
terms hereof, 


    (xv)  Liens
securing Non-Recourse Indebtedness of the Company or a Restricted Subsidiary thereof; provided
that such Liens apply only to the property financed out of the net proceeds of such Non-Recourse Indebtedness within 90 days of the Incurrence of such Non-Recourse
Indebtedness, 


    (xvi)  Liens
on property or assets of any Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary owing to the Company or one or more Restricted
Subsidiaries, 


    (xvii)  Liens
securing Indebtedness of an Unrestricted Subsidiary, 


    (xviii)  any
right of a lender or lenders to which the Company or a Restricted Subsidiary may be indebted to offset against, or appropriate and apply to the payment of,
such Indebtedness any and all balances, credits, deposits, accounts or monies of the Company or a Restricted Subsidiary with or held by such lender or lenders, 



12





 


    (xix)  any pledge or deposit of cash or property in conjunction with obtaining surety and performance bonds and letters of credit required to engage in constructing
on-site and off-site improvements required by municipalities or other governmental authorities in the ordinary course of business of the Company or any Restricted Subsidiary, 



    (xx)  Liens
in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods, 


    (xxi)  Liens
encumbering customary initial deposits and margin deposits, and other Liens that are customary in the industry and incurred in the ordinary course of
business securing Indebtedness under Hedging Obligations and forward contracts, options, futures contracts, futures options or similar agreements or arrangements designed to protect the Company or any
of its Subsidiaries from fluctuations in the price of commodities, and 



    (xxii)  Liens
arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business. 




    "Person" means any individual, corporation, partnership, 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. 


    "Preferred Stock" of any Person means all Capital Stock of such Person which has a preference in liquidation or with respect to the
payment of dividends. 


    "Refinancing Indebtedness" means Indebtedness that refunds, refinances or extends any Existing Indebtedness or other Indebtedness
permitted to be incurred by the Company or its Restricted Subsidiaries pursuant to the terms hereof, but only to the extent that 



    (i)  the
Refinancing Indebtedness is subordinated to the Notes or the Subsidiary Guarantees, as the case may be, to the same extent as the Indebtedness being refunded,
refinanced or extended, if at all, 


    (ii)  the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being refunded, refinanced or extended, or (b) after
the maturity date of the Notes, 


    (iii)  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 Indebtedness being refunded, refinanced or
extended that is scheduled to mature on or prior to the maturity date of the Notes, 


    (iv)  such
Refinancing Indebtedness is in an aggregate amount that is equal to or less than the aggregate amount then outstanding under the Indebtedness being refunded,
refinanced or extended, 


    (v)  such
Refinancing Indebtedness is Incurred by the same Person that initially Incurred the Indebtedness being refunded, refinanced or extended, except that the
Company may Incur Refinancing Indebtedness to refund, refinance or extend Indebtedness of any Restricted Subsidiary, and 


    (vi)  such
Refinancing Indebtedness is Incurred within 180 days after the Indebtedness being refunded, refinanced or extended is so refunded, refinanced or
extended. 




    "Registrar" means an office or agency where Notes may be presented for registration of transfer or for exchange. 


13





 


    "Restricted Investment" with respect to any Person means any Investment (other than any Permitted Investment) by such Person in any
(i) of its Affiliates, (ii) executive officer or director or any Affiliate of such Person, or (iii) any other Person other than a Restricted Subsidiary;  provided, however, that with
respect to the Company and its Restricted Subsidiaries, any loan or advance to an executive officer or director of the
Company or a Subsidiary will not constitute a Restricted Investment provided such loan or advance is made in the ordinary course of business and, if such loan or advance exceeds $100,000 (other than a
readily marketable mortgage loan not exceeding $500,000) such loan or advance has been approved by the Board of Directors of the Company or a disinterested committee thereof. Notwithstanding the
above, a Subsidiary Guarantee shall not be deemed a Restricted Investment. 


    "Restricted Payment" with respect to any Person means 



    (i)  the
declaration of any dividend or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person's
Capital Stock (except that a dividend payable solely in Capital Stock (other than Disqualified Stock) of such Person will not constitute a Restricted Payment), 


    (ii)  any
payment on account of the purchase, redemption, retirement or other acquisition for value of such Person's Capital Stock or any other payment or distribution
made in respect thereof (other than payments or distributions excluded from the definition of Restricted Payment in clause (i) above), either directly or indirectly, 



    (iii)  any
Restricted Investment, and 


    (iv)  any
principal payment, redemption, repurchase, defeasance or other acquisition or retirement of any Indebtedness of any Unrestricted Subsidiary or of Indebtedness
of the Company which is subordinated in right of payment to the Notes or of Indebtedness of a Restricted Subsidiary which is subordinated in right of payment to its Subsidiary Guarantee; 




provided, however, that with respect to the Company and its Subsidiaries, Restricted Payments will not include (a) any payment described in
clause (i), (ii) or (iii) above made to the Company or any of its Restricted Subsidiaries which are Wholly Owned Subsidiaries by any of the Company's Subsidiaries, or
(b) any purchase, redemption, retirement or other acquisition for value of Indebtedness or Capital Stock of such Person or its Subsidiaries if the consideration therefor consists solely of
Capital Stock (other than Disqualified Stock) of such Person. 


    "Restricted Subsidiary" means each of the Subsidiaries of the Company which is not an Unrestricted Subsidiary. 


    "Security Register" is a register of the Notes and of their transfer and exchange kept by the Registrar. 


    "Subsidiary" of any Person means any (i) corporation of which at least a majority of the aggregate voting power of all classes
of the Common Equity is directly or indirectly beneficially owned by such Person, and (ii) any entity other than a corporation of which such Person, directly or indirectly, beneficially owns at
least a majority of the Common Equity. 


    "Subsidiary Guarantee" means the guarantee of the Notes by each Subsidiary Guarantor hereunder. 


    "Subsidiary Guarantors" means each of (i) Beazer Homes Corp., a Tennessee corporation, Beazer/ Squires Realty, Inc., a
North Carolina corporation, Beazer Homes Sales Arizona Inc., a Delaware corporation, Beazer Realty Corp., a Georgia corporation, Beazer Mortgage Corporation, a Delaware corporation, Beazer
Homes Holdings Corp., a Delaware corporation, Beazer Homes Texas Holdings, Inc., a Delaware corporation and Beazer Homes Texas, L.P., a Delaware limited partnership and (ii) each of the
Company's Subsidiaries that becomes a guarantor of the Notes pursuant to the provisions hereof. 


14





 


    "Trust Officer" means any vice president, trust officer or other authorized person of the Trustee assigned by the Trustee to administer
its corporate trust matters. 


    "Trustee" means the party named as such until a successor replaces such party in accordance with the applicable provisions of the
Indenture and thereafter means the successor trustee serving under the Indenture. 


    "Unrestricted Subsidiary" means United Home Insurance Corp., Homebuilders Title Services, Inc., Homebuilders Title Services of
Virginia, Inc., Universal Solutions Insurance Agency, Inc., Texas Lone Star Title, LP, Beazer Realty, Inc., Security Title Insurance Company and each of the Subsidiaries of the
Company so designated by a resolution adopted by the Board of Directors of the Company as provided below and provided that (a) neither the Company nor any of its other Subsidiaries (other than
Unrestricted Subsidiaries) (1) provides any direct or indirect credit support for any Indebtedness of such Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of such Subsidiary, (b) the creditors with respect to Indebtedness for borrowed money of such Subsidiary have
agreed in writing that they have no recourse, direct or indirect, to the Company or any other Subsidiary of the Company (other than Unrestricted Subsidiaries), including, without limitation, recourse
with respect to the payment of principal or interest on any Indebtedness of such Subsidiary and (c) no default with respect to any Indebtedness of such Subsidiary (including any right which the
holders thereof may have to take enforcement action against such Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company and of its other
Subsidiaries (other than other Unrestricted Subsidiaries), to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity. The
Board of Directors of the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) any such
redesignation will be deemed to be an Incurrence by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such redesignated Subsidiary in accordance with Section 3.03
hereof as of the date of such redesignation, (ii) immediately after giving effect to such redesignation and the Incurrence of any such additional Indebtedness, the Company and its Restricted
Subsidiaries could incur $1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio contained in Section 3.03 hereof and (iii) the Liens of such Unrestricted
Subsidiary could then be incurred in accordance with Section 3.08 hereof as of the date of such redesignation. Subject to the foregoing, the Board of Directors of the Company also may designate
any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) all previous Investments by the Company and its Restricted Subsidiaries in such Restricted Subsidiary (net of any
returns previously paid on such Investments) will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under
Section 3.02, (ii) immediately after giving effect to such designation and reduction of amounts available for Restricted Payments under Section 3.02, the Company and its
Restricted Subsidiaries could incur $1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio contained in Section 3.03 hereof and (iii) no Default or Event of
Default shall have occurred or be continuing. Any such designation or redesignation by the Board of Directors of the Company will be evidenced to the Trustee by the filing with the Trustee of a
certified copy of the resolution of the Board of Directors of the Company giving effect to such designation or redesignation and an Officers' Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the underlying calculations. 


    "Weighted Average Life To Maturity" means, when applied to any Indebtedness or portion thereof, at any date, the number of years
obtained by dividing (i) 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, without limitation, payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between 


15





 


such date and the making of such payment by (ii) the sum of all such payments described in clause (a) above. 


    "Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of which 100 percent of the Common Equity (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) is owned directly by such Person or through one or more other Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a corporation in which
such Person, directly or indirectly, owns all of the Common Equity of such entity. 


    "Working Capital Facilities" means, collectively, the Bank Credit Facility and one or more other facilities among the Company, as
borrower thereunder, any Subsidiary Guarantor and one or more lenders pursuant to which the Company may Incur Indebtedness for working capital purposes or to finance the acquisition, holding or
development of property by the Company and the Restricted Subsidiaries (including the financing of any related interest reserve), as any such facility may be amended, restated, supplemented or
otherwise modified from time to time, and includes any agreement extending the maturity of, or restructuring (including, without limitation, the inclusion of additional borrowers thereunder that are
Unrestricted Subsidiaries), all or any portion of the Indebtedness under such facility or any successor facilities and includes any facility with one or more lenders refinancing or replacing all or
any portion of the Indebtedness under such facility or any successor facility. 


16






   ARTICLE THREE  


 Covenants  


Section 3.01.  Disposition of Proceeds of Asset Sales.


    (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make any Asset Sale unless 



     (i) the
Company or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value for the
shares or assets sold or otherwise disposed of; provided that the aggregate Fair Market Value of the consideration received from any Asset Sale that is not in the form of cash or cash equivalents (in
U.S. dollars or freely convertible into U.S. dollars) shall not, when aggregated with the Fair Market Value of all other noncash consideration received by the Company and its Restricted Subsidiaries
from all previous Asset Sales since the date hereof that has not been converted into cash or cash equivalents (in U.S. dollars or freely convertible into U.S. dollars), exceed five percent of the
Consolidated Tangible Assets of the Company at the time of the Asset Sale under consideration, and 


    (ii) the
Company shall apply or shall cause one or more of its Restricted Subsidiaries to apply an amount equal to the aggregate Net Proceeds received by the Company or
any Restricted Subsidiary from all Asset Sales occurring subsequent to the date hereof as follows: (A) to repay any outstanding Indebtedness of the Company that is not subordinated to the Notes
or other Indebtedness of the Company, or to the payment of any Indebtedness of any Restricted Subsidiary that is not subordinated to the Subsidiary Guarantee of such Restricted Subsidiary, in each
case within one year after such Asset Sale; or (B) to acquire properties and assets that shall be used in the businesses of the Company and its Restricted Subsidiaries existing on the date
hereof within one year after such Asset Sale, 




provided, however, that (x) in the case of applications contemplated by clause (ii)(A) the payment of such Indebtedness shall result in a
permanent reduction in committed amounts, if any, under the Indebtedness repaid at least equal to the amount of the payment made, (y) in the case of applications contemplated by
clause (ii)(B), the Board of Directors has, within such one year period, adopted in
good faith a resolution committing such Net Proceeds to such use and (z) none of such Net Proceeds shall be used to make any Restricted Payment. 



    The
amount of such Net Proceeds neither used to repay the Indebtedness described above nor used or invested as set forth in the preceding sentence constitutes "Excess Proceeds."
Notwithstanding the above, any Asset Sale that is subject to Section 3.11 hereof shall not be subject to this Section 3.01. 


    (b) Notwithstanding
Section 3.01 hereof, to the extent the Company or any of its Restricted Subsidiaries receives securities or other noncash property or assets
as proceeds of an Asset Sale, the Company shall not be required to make any application of such noncash proceeds required by clause (ii) of this Section 3.01 until it receives cash or
cash equivalent proceeds from a sale, repayment, exchange, redemption or retirement of or extraordinary dividend or return of capital on such noncash property. Any amounts deferred pursuant to the
preceding sentence shall be applied in accordance with clause (ii) of this Section 3.01 when cash or cash equivalent proceeds are thereafter received from a sale, repayment, exchange,
redemption or retirement of or extraordinary dividend or return of capital on such noncash property. 


    (c) When
the aggregate amount of Excess Proceeds equals $10,000,000 or more, the Company shall so notify the Trustee in writing by delivery of an Officers' Certificate
and shall offer to purchase from all Holders (an "Excess Proceeds Offer"), and shall purchase from Holders accepting such Excess Proceeds Offer on the
date fixed for the closing of such Excess Proceeds Offer (the "Asset Sale Offer Date"), the maximum principal amount (expressed as a multiple of $1,000)
of Notes plus accrued and 


17





 


unpaid interest thereon, if any, to the Asset Sale Offer Date that may be purchased and paid, as the case may be, out of the Excess Proceeds, at an offer price (the "Asset Sale
Offer Price") in cash in an amount equal to 100 percent of the principal amount thereof plus accrued and unpaid interest, if any, to the Asset Sale Offer Date, in
accordance with the procedures set forth in this Section 3.01. To the extent that the aggregate amount of Notes tendered pursuant to an Excess Proceeds Offer is less than the Excess Proceeds
relating thereto, then the Company may use such Excess Proceeds, or a portion thereof, for general corporate purposes in the business of the Company and its Restricted Subsidiaries existing on the
date hereof. Upon completion of an Excess Proceeds Offer, the amount of Excess Proceeds shall be reset at zero. 


    (d) Within
30 days after the date on which the amount of Excess Proceeds equals $10,000,000 or more, the Company (with notice to the Trustee) or the Trustee at
the Company's request (and at the expense of the Company) will send or cause to be sent by first-class mail to all Persons who were Holders on the date such Excess Proceeds equaled $10,000,000, at
their respective addresses appearing in the Security Register, a notice of such occurrence and of such Holders' rights arising as a result thereof.
Such notice will contain all instructions and materials necessary to enable Holders to tender their Notes to the Company. Such notice, which will govern the terms of the Excess Proceeds Offer, will
state: 



     (i) that
the Excess Proceeds Offer is being made pursuant to this Section 3.01 and the length of time such Excess Proceeds Offer will remain open; 


    (ii) that
the Holder has the right to require the Company to repurchase such Holder's Notes at the Asset Sale Offer Price; 



    (iii) that
any Note not tendered will continue to accrue interest; 


    (iv) that
any Note accepted for payment pursuant to the Excess Proceeds Offer will cease to accrue interest on the Asset Sale Offer Date; 


    (v) that
the Asset Sale Offer Date will be no earlier than 45 days nor later than 60 days from the date such notice is mailed; 


    (vi) that
Holders electing to have a Note purchased pursuant to any Excess Proceeds Offer will be required to surrender the Note to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the notice prior to termination of the Excess Proceeds Offer; 



   (vii) that
Holders will be entitled to withdraw their election if the Company, depositary or Paying Agent, as the case may be, receives, not later than the expiration
of the Excess Proceeds Offer, or such longer period as may be required by law, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have the Note purchased; 


   (viii) that
Holders whose Notes are purchased only in part will be issued Notes equal in principal amount to the unpurchased portion of the Notes surrendered; and 


    (ix) information
concerning the details of the Excess Proceeds Offer and the business of the Company which the Company in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (A) the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements of
the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Sales otherwise described in the
offering materials relating to the Excess Proceeds Offer (or corresponding successor reports) (or in the event the Company is not required to prepare any of 



18





 


the foregoing Forms, the comparable information required pursuant to Section 3.12 hereof); provided that the Company may at its option
incorporate by reference any such filed reports in the notice, (B) a description of material developments in the Company's business subsequent to the date of the latest of such reports and
(C) if material, appropriate pro forma financial information. 




    (e) In
the event the aggregate principal amount of Notes surrendered by Holders together with accrued interest thereon exceeds the amount of Excess Proceeds, the
Company will select the Notes to be purchased on a pro rata basis from all Notes so surrendered, with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations
of $1,000, or integral multiples thereof, will be purchased. To the extent that the Excess Proceeds remaining are less than $1,000, the Company may use such Excess Proceeds for general corporate
purposes. Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. 


    (f)  Not
later than one Business Day after the Asset Sale Offer Date in connection with which the Excess Proceeds offer is being made, the Company will
(i) accept for payment Notes or portions thereof tendered pursuant to the Excess Proceeds Offer (on a pro rata basis if required), (ii) deposit with the Paying Agent money sufficient, in
immediately available funds, to pay the purchase price of all Notes or portions thereof so accepted and (iii) deliver to the Paying Agent an Officers' Certificate identifying the Notes or
portions thereof accepted for payment by the Company. The Paying Agent will promptly mail or deliver to Holders so accepted payment in an amount equal to the Asset Sale Offer Price of the Notes
purchased from each such Holder, and the Company will execute and upon receipt of an Officers' Certificate of the Company the Trustee will promptly authenticate and mail or deliver to such Holder a
new Note equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be promptly mailed or delivered by the Paying Agent at the Company's expense to
the Holder thereof. The Company will publicly announce the results of the Excess Proceeds Offer promptly after the Asset Sale Offer Date. For purposes of this Section 3.01(f), the Company will
choose a Paying Agent which will not be the Company or a Subsidiary thereof. 


    (g) Any
Excess Proceeds Offer will be conducted by the Company in compliance with applicable law, including, without limitation, Section 14(e) of the Exchange
Act and Rule 14e -1 thereunder, if applicable. 


    (h) Whenever
Excess Proceeds are received by the Company, and prior to the allocation of such Excess Proceeds pursuant to this Section 3.01, such Excess Proceeds
will be set aside by the Company in a separate account to be held in trust for the benefit of the Holders; provided, however, that in the event the
Company will be unable to set aside such Excess Proceeds in a separate account because of provisions of applicable law or of the Working Capital Facilities, the Company will not be required to set
aside such Excess Proceeds. 


    (i)  Notwithstanding
the foregoing, an Excess Proceeds Offer may be made by one or more Restricted Subsidiaries in lieu of the Company. 


Section 3.02.  Limitations on Restricted Payments.


    (a) The
Company shall not, and shall not cause or permit any of its Restricted Subsidiaries to, make any Restricted Payment, directly or indirectly, after the date
hereof if at the time of such Restricted Payment: 



     (i) the
amount of such proposed Restricted Payment (the amount of such Restricted Payment, if other than in cash, shall be determined in good faith by a majority of the
disinterested members of the Board of Directors of the Company), when added to the aggregate amount of all Restricted Payments declared or made after the date hereof, exceeds the sum of: 



    (1) $100 million,
plus




19





 



    (2) 50 percent of the Company's Consolidated Net Income accrued during the period (taken as a single period) commencing April 1, 2001 and ending on the
last day of the fiscal quarter immediately preceding the fiscal quarter in which the Restricted Payment is to occur (or, if such aggregate Consolidated Net Income is a deficit, minus
100 percent of such aggregate deficit), plus


    (3) the
net cash proceeds derived from the issuance and sale of Capital Stock of the Company and its Restricted Subsidiaries that is not Disqualified Stock (other than
a sale to a Subsidiary of the Company) after the date hereof, plus


    (4) 100 percent
of the principal amount of, or, if issued at a discount, the accreted value of, any Indebtedness of the Company or a Restricted Subsidiary which
is issued (other than to a Subsidiary of the Company) after the date hereof that is converted into or exchanged for Capital Stock of the Company that is not Disqualified Stock,  plus


    (5) 100 percent
of the aggregate amounts received by the Company or any Restricted Subsidiary from the sale, disposition or liquidation (including by way of
dividends) of any Investment (other than to any Subsidiary of the Company and other than to the extent sold, disposed of or liquidated with recourse to the Company or any of its Subsidiaries or to any
of their respective properties or assets) but only to the extent (x) not included in clause (2) above and (y) that the making of such Investment constituted a permitted Restricted
Investment, plus


    (6) 100 percent
of the principal amount of, or if issued at a discount, the accreted value of, any Indebtedness or other obligation that is the subject of a
guarantee by the Company which is released (other than due to a payment on such guarantee) after the date hereof, but only to the extent that such guarantee constituted a permitted Restricted Payment;
or 




    (ii) the
Company would be unable to incur $1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio contained in Section 3.03 hereof;
or 


    (iii) a
Default or Event of Default has occurred and is continuing or occurs as a consequence thereof. 




    (b) Notwithstanding
the foregoing, the provisions of this Section 3.02 shall not prevent: 



     (i) the
payment of any dividend within 60 days after the date of declaration thereof if the payment thereof would have complied with the limitations herein
contained on the date of declaration, provided that (x) such dividend shall be deemed to have been paid as of its date of declaration for the
purposes of this Section 3.02 and (y) at the time of payment of such dividend no other Default or Event of Default shall have occurred and be continuing or would result therefrom; 


    (ii) the
retirement of shares of the Company's Capital Stock or the Company's or a Restricted Subsidiary of the Company's Indebtedness for, or out of the net proceeds
of a substantially concurrent sale (other than a sale to a Subsidiary of the Company) of, other shares of its Capital Stock (other than Disqualified Stock), provided  that the proceeds of any such sale
shall be excluded in any computation made under clause (3) above; 



    (iii) the
redemption, repurchase, defeasance or retirement for value of Indebtedness, including premium, if any, with the proceeds of Refinancing Indebtedness; 


    (iv) payments
or distributions pursuant to or in connection with a merger, consolidation or transfer of assets that complies with the provisions hereof applicable to
mergers, consolidations and transfers of all or substantially all of the property and assets of the Company or any Guarantor; or 



20





 


    (v) Investments in the Joint Venture Entity in an aggregate amount not to exceed $6.0 million. 




Section 3.03.  Limitations on Additional Indebtedness.


    (a) The
Company shall not, and shall not cause or permit any of its Subsidiaries, directly or indirectly, to, Incur any Indebtedness (other than Indebtedness between
the Company and its Restricted Subsidiaries which are Wholly Owned Subsidiaries or among such Restricted Subsidiaries which are Wholly Owned Subsidiaries) including Acquisition Indebtedness, unless,
after giving effect thereto and the application of the proceeds therefrom, either (i) the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0 or
(ii) the ratio of Indebtedness of the Company and the Restricted Subsidiaries to Consolidated Tangible Net Worth is less than 2.25 to 1. 


    (b) Notwithstanding
the foregoing, the provisions hereof shall not prevent: 



     (i) the
Company from Incurring (A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness, (C) Indebtedness evidenced by the Notes
issued on the Issue Date, or (D) Indebtedness Incurred under Working Capital Facilities not to exceed the greater of $75 million or 15% of Consolidated Tangible Assets, 


    (ii) Unrestricted
Subsidiaries from Incurring Indebtedness, 


    (iii) any
Subsidiary Guarantee of Indebtedness of the Company under the Notes, 


    (iv) the
Company and its Restricted Subsidiaries from Incurring Indebtedness under any deposits made to secure performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, progress statements, government contracts and other obligations of like nature (exclusive of the obligation for the payment of borrowed money), and 



    (v) the
Company and its Restricted Subsidiaries from guaranteeing Indebtedness of the Joint Venture Entity in an amount not to exceed $6.0 million less the
amount of all other Investments made by the Company and its Restricted Subsidiaries in the Joint Venture Entity, in each case Incurred in the ordinary course of business of the Company or the
Restricted Subsidiary. 




    (c) The
Company shall not, and the Company shall not cause or permit any Subsidiary Guarantor that is a Restricted Subsidiary to, directly or indirectly, in any event
Incur any Indebtedness that purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of the Company or of such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinated to the Notes or the Subsidiary
Guarantee of such Subsidiary Guarantor, as the case may be, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be. 


    (d) For
purposes of determining compliance with this Section 3.03, in the event an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses of this Section 3.03, the Company, in its sole discretion, shall classify such item of Indebtedness and only be required to include the amount and
type of such Indebtedness in one of such clauses. 


Section 3.04.  Restrictions on Restricted Subsidiary Indebtedness.


21





 


    In addition to the limitations provided for under Section 3.03 hereof, the Company shall not permit any Restricted Subsidiaries to, directly or indirectly, Incur any additional
Indebtedness after the date hereof other than: 



     (i) any
guarantee of Indebtedness of the Company permitted to be Incurred hereunder (other than Non-Recourse Indebtedness), 


    (ii) Refinancing
Indebtedness, 


    (iii) Non-Recourse
Indebtedness, 


    (iv) Acquisition
Indebtedness not to exceed $20 million aggregate principal amount at any one time outstanding, 


    (v) Indebtedness
to the Company for so long as held by the Company; provided that such Indebtedness is subordinated to any Subsidiary Guarantee, 



    (vi) Indebtedness
to another Restricted Subsidiary which is a Wholly Owned Subsidiary so long as held by such Restricted Subsidiary; provided that such Indebtedness is
subordinated to any Subsidiary Guarantee, 


   (vii) any
Subsidiary Guarantee of Indebtedness of the Company under the Notes and 


   (viii) any
deposits made to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress statements, government contracts, and
other obligations of like nature (exclusive of the obligation for the payment of borrowed money), 




in
each case Incurred in the ordinary course of business of the Restricted Subsidiary, consistent with past practice. 


Section 3.05.  Limitations and Restrictions on Issuance of Capital Stock of Restricted Subsidiaries.


    The
Company shall not permit any Restricted Subsidiary to issue, or permit to be outstanding at any time, Preferred Stock or any other Capital Stock constituting Disqualified Stock
other than any such Capital Stock issued to or held by the Company or any Restricted Subsidiary of the Company which is a Wholly Owned Subsidiary. 



Section 3.06.  Change of Control.


    (a) Upon
the occurrence of any Change of Control, the Company shall so notify the Trustee in writing by delivery of an Officers' Certificate and shall offer to purchase
(a "Change of Control Offer") from all Holders, and shall purchase from Holders accepting such Change of Control Offer on the date fixed for the closing
of such Change of Control Offer (the "Change of Control Payment Date"), the outstanding principal amount of Notes at an offer price (the
"Change of Control Price") in cash in an amount equal to 101 percent of the aggregate principal amount thereof plus accrued and unpaid interest,
if any, to the Change of Control Payment Date in accordance with the procedures set forth in this Section 3.06. 


    (b) Within
30 days after the date on which a Change of Control occurs, the Company (with notice to the Trustee) or the Trustee at the Company's request (and at
the expense of the Company), will send or
cause to be sent by first class mail, postage prepaid, to all Persons who were Holders on the date of the Change of Control at their respective addresses appearing in the Security Register, a notice
of such occurrence and of such Holders' rights arising as a result thereof. Such notice will contain all instructions and materials necessary to enable Holders to tender their Notes to the Company.
Such notice, which will govern the terms of the Change of Control Offer, will state: 



     (i) that
the Change of Control Offer is being made pursuant to Section 3.06(a) hereof and the length of time the Change of Control Offer will remain open; 



22






 


    (ii) that the Holder has the right to require the Company to repurchase such Holder's Notes at the Change of Control Price; 


    (iii) that
any Note not tendered will continue to accrue interest; 


    (iv) that
any Note accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date; 


    (v) that
the Change of Control Payment Date will be no earlier than 45 days nor later than 60 days from the date such notice is mailed; 



    (vi) that
Holders electing to have a Note purchased pursuant to any Change of Control Offer will be, required to surrender the Note to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the notice prior to termination of the Change of Control Offer; 


   (vii) that
Holders will be entitled to withdraw their election if the Company, depositary or Paying Agent, as the case may be, receives, not later than the expiration
of the Change of Control Offer, or such longer period as may be required by law, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have the Note purchased; 



   (viii) that
Holders which elect to have their Notes purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes
surrendered; 


    (ix) information
concerning the date and details of the Change of Control and the business of the Company which the Company in good faith believes will enable such
Holders to make an informed decision (which at a minimum will include (A) the most recently filed Annual Report on Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent to
such Quarterly Report, other than Current Reports describing Asset Sales otherwise described in the offering materials relating to the Change of Control Offer (or corresponding successor reports) (or
in the event the Company is not required to prepare any of the foregoing Forms, the comparable information required pursuant to Section 4.03 hereof); provided  that the Company may at its option
incorporate by reference any such filed reports in the notice, (B) a description of material developments in the Company's business
subsequent to the date of the latest of such reports, and (C) if material, appropriate pro forma financial information). 




    (c) In
the event of a Change of Control Offer, the Company will only be required to accept Notes in denominations of $1,000 or integral multiples thereof. 


    (d) Not
later than one Business Day after the Change of Control Payment Date in connection with which the Change of Control Offer is being made, the Company will
(i) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent money sufficient, in immediately available funds, to
pay the purchase price of all Notes or portions thereof so accepted and (iii) deliver to the Paying Agent an Officers' Certificate identifying the Notes or portions thereof accepted for payment
by the Company. The Paying Agent will promptly mail or deliver to Holders of Notes so accepted payment in an amount equal to the Change of Control Price of the Notes purchased from each such Holder,
and the Company will execute and, upon receipt of an Officers' Certificate of the Company, the Trustee will promptly authenticate and mail or deliver to such Holder a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be promptly mailed or delivered by the Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the 


23





 


Change of Control Offer promptly after the Change of Control Payment Date. For purposes of this Section 3.06(d), the Company will choose a Paying Agent which will not be the Company or a
Subsidiary thereof. 


    (e) Any
Change of Control Offer will be conducted by the Company in compliance with applicable law, including, without limitation, Section 14(e) of the Exchange
Act and Rule 14e-1 thereunder. 


Section 3.07.  Limitations on Transactions with Stockholders and Affiliates.


    The
Company shall not, and shall not permit any of its Subsidiaries to, make any Investment, loan, advance, guarantee or capital contribution to or for the benefit of, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, (i) any Affiliate of the Company or any Affiliate of the Company's Subsidiaries or (ii) any Person (or any Affiliate of such person) holding
10 percent or more of the Common Equity of the Company or any of its Subsidiaries (each an "Affiliate Transaction"), except on terms that are no
less favorable to the Company or the relevant Subsidiary, as the case may be, than those that could have been obtained in a comparable transaction on an arm's length basis from a person that is not an
Affiliate. 


    The
Company shall not, and shall not permit any of its Subsidiaries to, enter into any Affiliate Transaction involving or having a value of more than $1 million, unless, in
each case, such Affiliate Transaction has been approved by a majority of the disinterested members of the Company's Board of Directors. 


    The
Company shall not, and shall not permit any of its Subsidiaries to, enter into an Affiliate Transaction involving or having a value of more than $5 million unless the
Company has delivered to the Trustee an opinion of an Independent Financial Advisor to the effect that the transaction is fair to the Company or the relevant Subsidiary, as the case may be, from a
financial point of view. 


    Notwithstanding
the foregoing, an Affiliate Transaction shall not include (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of,
employees of the Company or its Subsidiaries (in their capacity as such) that has been approved by the Company's Board of Directors, (ii) Capital Stock issuances to members of the Board of
Directors, officers and employees, of the Company or its Subsidiaries pursuant to plans approved by the stockholders of the Company, (iii) any Restricted Payment otherwise permitted under
Section 3.02 hereof, (iv) any transaction between the Company and a Restricted Subsidiary or a Restricted Subsidiary and another Restricted Subsidiary, (v) any transaction
pursuant to the tax sharing agreement, the agreement with Beazer Homes Ltd. regarding use of name and the cross-indemnity agreement, in each case with the Company's former parent or affiliates,
as such agreements are in effect on the date hereof or (vi) any transactions pursuant to the joint venture agreement with the Joint Venture Entity, as such agreement is in effect on the date
hereof. 


Section 3.08.  Limitations on Liens.


    The
Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens, other than Permitted Liens, on any of its or
their assets, property, income or profits therefrom unless contemporaneously therewith or prior thereto all payments due hereunder and under the Notes are secured on an equal and ratable basis with
the obligation or liability so secured until such time as such obligation or liability is no longer secured by a Lien. No Liens shall be permitted to be created or suffered to exist on any
Indebtedness from the Company in favor of any Restricted Subsidiary and that such Indebtedness shall not be permitted to be sold, disposed of or otherwise transferred. 


Section 3.09.  Limitations on Restrictions on Distributions from Restricted Subsidiaries.


24





 


    The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, assume or otherwise cause or suffer to exist or become effective any consensual encumbrance
or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its other Restricted Subsidiaries, or pay interest on or principal of any Indebtedness owed to the Company or any of its other Restricted Subsidiaries,
(ii) make loans or advances to the Company or any of its other Restricted Subsidiaries, or (iii) transfer any of its properties or assets to the Company or any of its other Restricted
Subsidiaries, except for encumbrances or restrictions existing under or by reason of (a) applicable law, (b) covenants or restrictions contained in the agreements evidencing Existing
Indebtedness as in effect on the date hereof, (c) any restrictions or encumbrances arising under Acquisition Indebtedness; provided, that such
encumbrance or restriction applies only to the obligor on such Indebtedness and its Subsidiaries and that such Acquisition Indebtedness was not incurred by the Company or any of its Subsidiaries or by
the Person being acquired in connection with or in anticipation of such acquisition, (d) any restrictions or encumbrances arising in connection with Refinancing Indebtedness;  provided that any
restrictions and encumbrances of the type described in this clause (d) that arise under such Refinancing Indebtedness are not
more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded, refinanced, replaced or extended, (e) any agreement restricting the sale or other
disposition of property securing Indebtedness permitted by the terms hereof if such agreement does not expressly restrict the ability of a Subsidiary of the Company to pay dividends or make loans or
advances, and (f) reasonable and customary borrowing base covenants set forth in agreements evidencing Indebtedness otherwise permitted by the terms hereof, which covenants restrict or limit
the distribution of revenues or sale proceeds from real estate or a real estate project based upon the amount of indebtedness outstanding on such real estate or real estate project and the value of
some or all of the remaining real estate or the project's remaining assets, and customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Company or
any of its Restricted Subsidiaries. 


Section 3.10.  Maintenance of Consolidated Tangible Net Worth.


    (a) In
the event that the Consolidated Tangible Net Worth of the Company is less than $85,000,000 at the end of any two consecutive fiscal quarters (the last day of the
second fiscal quarter being referred to herein as the "Deficiency Date"), within 30 days after the end of each such period, the Company shall so
notify the Trustee in writing by delivery of an Officers' Certificate and shall offer to purchase from all Holders (a "Net Worth Offer"), and shall
purchase from Holders accepting such Net Worth Offer on the date fixed for the closing of such Net Worth Offer (the "Net Worth Offer Date"),
10 percent of the original outstanding principal amount of the Notes (the "Net Worth Amount") at an offer price (the "Net
Worth Offer Price") in cash in an amount equal to 100 percent of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to the Net Worth Offer
Date. To the extent that the aggregate amount of Notes tendered pursuant to a Net Worth Offer is less than the Net Worth
Amount relating thereto, then the Company may use the excess of the Net Worth Amount over the amount of Notes tendered, or a portion thereof, for general corporate purposes. In no event shall the
Company's failure to meet the Consolidated Tangible Net Worth threshold at the end of any fiscal quarter be counted toward the making of more than one Net Worth Offer. The Company may reduce the
principal amount of Notes to be purchased pursuant to the Net Worth Offer by subtracting 100 percent of the principal amount (excluding premium) of Notes acquired by the Company or any Wholly
Owned Subsidiary subsequent to the Deficiency Date and surrendered for cancellation through purchase, redemption (other than pursuant to this Section 3.10) or exchange, and that were not
previously used as a credit against any obligation to repurchase Notes pursuant to this Section 3.10. 


    (b) In
the event the Consolidated Tangible Net Worth of the Company is less than $85,000,000 at the end of any two consecutive fiscal quarters, within 30 days
after the end of such period, the Company (with notice to the Trustee) or the Trustee at the Company's request (and at the expense of 


25





 


the Company) will send or cause to be sent by first-class mail, postage pre-paid, to all Persons who were Holders on the date of the end of the second such consecutive fiscal quarter, at
their respective addresses appearing in the Security Register, a notice of such occurrence and of each Holder's rights arising as a result thereof. Such notice will contain all instructions and
materials necessary to enable Holders to tender their Notes to the Company. Such notice, which will govern the terms of the Net Worth Offer, will state: 



     (i) that
the Net Worth Offer is being made pursuant to Section 3.10(a) hereof and the length of time such Net Worth Offer will remain open; 


    (ii) that
the Holder has the right to require the Company to repurchase such Holder's Notes at the Net Worth Offer Price; 


    (iii) that
any Note not tendered will continue to accrue interest; 


    (iv) that
any Note accepted for payment pursuant to the Net Worth Offer will cease to accrue interest on the Net Worth Offer Date; 


    (v) that
the Net Worth Offer Date will be no earlier than 45 days nor later than 60 days from the date such notice is mailed; 



    (vi) that
Holders electing to have a Note purchased pursuant to any Net Worth Offer will be required to surrender the Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Note completed, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice prior to termination of the
Net Worth Offer; 


   (vii) that
Holders will be entitled to withdraw their election if the Company, depositary or Paying Agent, as the case may be, receives, not later than the expiration
of the Net Worth Offer, or such longer period as may be required by law, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for the purchase and a statement that such Holder is withdrawing its election to have the Note purchased; 


   (viii) that
Holders whose Notes are purchased only in part will be issued Notes equal in principal amount to the unpurchased portion of the Notes surrendered; and 


    (ix) information
concerning the period and details of the events requiring the Net Worth Offer and the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will include (A) the most recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed
subsequent to such Quarterly Report, other than Current Reports describing Asset Sales otherwise described in the offering materials relating to the Net Worth Offer (or corresponding successor
reports) (or in the event the Company is not required to prepare any of the foregoing Forms, the comparable information required pursuant to Section 3.12 hereof);  provided that the Company may, at
its option, incorporate by reference any such filed reports in the notice, (B) a description of material
developments in the Company's business subsequent to the date of the latest of such reports, and (C) if material, appropriate pro forma financial information). 




    (c) In
the event that the aggregate principal amount of Notes surrendered by Holders exceeds the Net Worth Amount, the Company will select the Notes to be purchased on
a pro rata basis from all Notes so surrendered, with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples thereof, will be purchased. To the extent that the Net Worth Amount remaining is less than $1,000, the Company may use such Net Worth 


26





 


Amount for general corporate purposes. Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. 



    (d) Not
later than one Business Day after the Net Worth Offer Date in connection with which the Net Worth Offer is being made, the Company will (i) accept for
payment Notes or portions thereof tendered pursuant to the Net Worth offer (on a pro rata basis if required pursuant to Section 3.10(c) above),
(ii) deposit with the Paying Agent money sufficient, in immediately available funds, to pay the purchase price of all Notes or portions thereof so accepted and (iii) deliver to the
Paying Agent an Officers' Certificate identifying the Notes or portions thereof accepted for payment by the Company. The Paying Agent will promptly mail or deliver to Holders of Notes so accepted
payment in an amount equal to the Net Worth Offer Price of the Notes purchased from each such Holder, and the Company will execute and the Trustee will promptly authenticate and mail or deliver to
such Holder a new Note equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be promptly mailed or delivered by the Paying Agent at the Company's
expense to the Holder thereof. The Company will publicly announce the results of the Net Worth Offer promptly after the Net Worth Offer Date. For purposes of this Section 3.10(d), the Company
will choose a Paying Agent which will not be the Company or a Subsidiary thereof. 


    (e) Any
Net Worth Offer will be conducted by the Company in compliance with applicable law, including, without limitation, Section 14(e) of the Exchange Act and
Rule 14e-1 thereunder, if applicable. 


Section 3.11.  Limitations on Mergers and Consolidations.


    (a) Neither
the Company nor any Subsidiary Guarantor shall consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of
its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its obligations under the Notes or the Guarantees or hereunder (as an entirety or substantially in
one transaction or series of related transactions), to any Person or permit any of its Restricted Subsidiaries to do any of the foregoing (in each case other than with the Company or another Wholly
Owned Restricted Subsidiary) unless: 



     (i) the
Person formed by or surviving such consolidation or merger (if other than the Company or such Subsidiary Guarantor, as the case may be), or to which such sale,
lease, conveyance or other disposition or assignment shall be made (collectively, the "Successor"), is a solvent corporation or other legal entity
organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form reasonably satisfactory to
the Trustee all of the obligations of the Company or such Subsidiary Guarantor, as the case may be, under the Notes or such Subsidiary Guarantor's Subsidiary Guarantee, as the case may be, and
hereunder, 


    (ii) immediately
after giving effect to such transaction, no Default or Event of Default has occurred and is continuing, 


    (iii) immediately
after giving effect to such transaction and the use of any net proceeds therefrom, on a pro forma basis, the Consolidated Tangible Net Worth of the
Company or the Successor (in the case of a transaction involving the Company), as the case may be, would be at least equal to the Consolidated Tangible Net Worth of the Company immediately prior to
such transaction, 


    (iv) immediately
after giving effect to such transaction and the use of any net proceeds therefrom, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio
of the Company or the Successor (in the case of a transaction involving the Company), as the case may be, would be such that the Company or the Successor (in the case of a transaction involving the
Company), as the case may be, would be entitled to Incur at least $1.00 of additional Indebtedness under such Consolidated Fixed Charge Coverage Ratio test set forth in Section 3.03 hereof, and 



27





 


    (v) The Company or any Subsidiary Guarantor, as the case may be, will deliver to the Trustee prior to the consummation of the proposed transaction an Officers'
Certificate to the foregoing effect and an opinion of counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture. 




    (b) Upon
any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or any assignment of
its obligations under this Indenture or the Notes in accordance with this Section 3.11, upon assumption by the successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of, premium, if any, and interest on all of the Notes and the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be performed or observed by the Company, the Successor formed by such consolidation or into or with which the Company is merged or
to which such sale, lease, conveyance or other disposition or assignment is made will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor has been named as the Company herein and such Successor may cause to be signed and may issue in its own name or in the name of the Company, any or all Notes
issuable hereunder and the predecessor Company, in the case of a sale, lease, conveyance or other disposition or assignment, will be released from all obligations under this Indenture and the Notes. 


Section 3.12.  Reports.


    As
long as any of the Notes are outstanding, the Company shall deliver to the Trustee and mail to each Holder within 15 days after the filing of the same with the Commission
copies of the quarterly and annual reports and of the information, documents and other reports with respect to the Company and the Subsidiary Guarantors, if any, which the Company and the Subsidiary
Guarantors may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that neither the Company nor any of the Subsidiary Guarantors may be
required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the Commission and provide the Trustee and Holders
with such annual and quarterly reports and such information, documents and other reports with respect to the Company and the Subsidiary Guarantors as are required under Sections 13 and 15(d) of the
Exchange Act. If filing of documents by the Company with the Commission as aforementioned in this paragraph is not permitted under the
Exchange Act, the Company shall promptly upon written notice supply copies of such documents to any prospective holder. The Company and each Subsidiary Guarantor shall also comply with the other
provisions of Section 314(a) of the Trust Indenture Act. 


Section 3.13.  Subsidiary Guarantees.


    After
the date hereof, the Company will cause each of its Subsidiaries that is or becomes a Restricted Subsidiary (other than, in the Company's discretion, any Restricted Subsidiary
the assets of which have a book value of not more than $5,000,000) to be a Subsidiary Guarantor hereunder in accordance with the provisions of Section 11.03 hereof. The Company may, in its
discretion, cause any Unrestricted Subsidiary to become a Subsidiary Guarantor hereunder in the same manner. 


28






   ARTICLE FOUR  


 Subsidiary Guarantees  


    Section 4.01.
Subsidiary Guarantees of Notes. 


    Subject
to the provisions of this Article 4, each Subsidiary Guarantor hereby jointly and severally unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company or any other
Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the principal of, premium, if any, and interest on the Notes will be duly and punctually paid in full when
due, whether at maturity, by acceleration or otherwise, and interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and all other obligations of the
Company or the Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder (including fees, expenses or other) and all other obligations with respect to the Notes, this Supplemental
Indenture and the Indenture will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of
any Notes, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. Failing payment
when due of any amount so guaranteed, or failing performance of any other obligation of the Company to the Holders, for whatever reason, each Subsidiary Guarantor will be obligated to pay, or to
perform or cause the performance of, the same immediately. An Event of Default under the Indenture, this Supplemental Indenture or the Notes shall constitute an event of default under this Subsidiary
Guarantee, and shall entitle the Holders of Notes to accelerate the obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the obligations of the Company and
the Subsidiary Guarantors. 


    Each
of the Subsidiary Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the
Indenture or this Supplemental Indenture, the absence of any action to enforce the same, any waiver or consent by any holder of the Notes with respect to any provisions hereof or thereof, any release
of any other Subsidiary Guarantor, the recovery of any judgment against the Company, any action to enforce the same, whether or not a Subsidiary Guarantee is affixed to any particular Note, or any
other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each of the Subsidiary Guarantors hereby waives the benefit of diligence,
presentment,
demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and this Subsidiary Guarantee. If
any Holder or the Trustee is required by any court or otherwise to return to the Company or to any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in
relation to the Company or such Subsidiary Guarantor, any amount paid by the Company or such Subsidiary Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor further agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand,
(a) subject to this Article 4, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 5 hereof or Article 5 of the Indenture for the
purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the
event of any acceleration of such obligations as provided in Article 5 hereof or Article 5 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due
and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. 


29





 


    This Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization,
should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall,
to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Subsidiary Guarantees shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 


    No
stockholder, officer, director, employer or incorporator, past, present or future, or any Subsidiary Guarantor, as such, shall have any personal liability under this Subsidiary
Guarantee by reason of his, her or its status as such stockholder, officer, director, employer or incorporator. 


    The
Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Subsidiary Guarantee. 


    Each
Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the guarantee by each Subsidiary Guarantor
pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the Holders and each Subsidiary Guarantor hereby
irrevocably agree that the obligations of each Subsidiary Guarantor under the Subsidiary Guarantees shall be limited to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of each Subsidiary Guarantor, result in the obligations of each Subsidiary Guarantor under the Subsidiary Guarantees not constituting such fraudulent transfer or conveyance. 


    Section 4.02.
Execution and Delivery of Subsidiary Guarantee. 


    To
further evidence the Subsidiary Guarantee set forth in Section 4.01, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee, substantially in
the form included in Exhibit C hereto, shall be endorsed on each Note authenticated and delivered by the Trustee after such Subsidiary Guarantee is executed and executed by either manual or
facsimile signature of an Officer of each Subsidiary Guarantor. The validity and enforceability of any Subsidiary Guarantee shall not be affected by the fact that it is not affixed to any particular
Note. 


    Each
of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Subsidiary Guarantee. 


    If
an Officer of a Subsidiary Guarantor whose signature is on this Indenture or a Note no longer holds that office at the time the Trustee authenticates such Note or at any time
thereafter, such Subsidiary Guarantor's Subsidiary 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 Subsidiary Guarantee set forth in this Indenture on behalf of
the Subsidiary Guarantor. 


    Section 4.03.
Additional Subsidiary Guarantors. 


    Any
Person may become a Subsidiary Guarantor by executing and delivering to the Trustee (a) a supplemental indenture in form and substance satisfactory to the Trustee which
subjects such Person to the provisions of this Indenture as a Subsidiary Guarantor, and (b) an opinion of Counsel to the effect 


30





 


that such supplemental indenture has been duly authorized and executed by such Person and constitutes the legal, valid, binding and enforceable obligation of such Person (subject to such customary
exceptions concerning fraudulent conveyance laws, creditors' rights and equitable principles as may be acceptable to the Trustee in its discretion). 


    Section 4.04.
Release of a Subsidiary Guarantor. 


    (a)  Except
in the case where the prohibition on transfer in Section 3.11 is applicable, if all or substantially all of the assets of any Subsidiary Guarantor or
all of the capital stock of any Subsidiary Guarantor is sold (including by issuance or otherwise) by the Company or any of its Subsidiaries in a transaction constituting an Asset Sale, and if the Net
Proceeds from such Asset Sale are used in accordance with Section 3.01, then such Subsidiary Guarantor (in the event of a sale or other disposition of all of the capital stock of such
Subsidiary Guarantor) or the corporation acquiring such assets (in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor) shall be deemed
automatically and unconditionally released and discharged from all obligations under this Article 4 without any further action required on the part of the Trustee or any Holder,  provided that each
such Subsidiary Guarantor (or its assets) is sold or disposed of in accordance with Section 3.01 and Article 5 hereof
and Article 5 of the Indenture. 


    (b)  The
Trustee shall deliver an appropriate instrument evidencing the release of a Subsidiary Guarantor upon receipt of a request of the Company accompanied by an
Officers' Certificate certifying as to the compliance with this Section 4.04. Any Subsidiary Guarantor not so released or the entity surviving such Subsidiary Guarantor, as applicable, will
remain or be liable under its Subsidiary Guarantee as provided in this Article 4. 


    The
Trustee shall execute any documents reasonably requested by the Company or a Subsidiary Guarantor in order to evidence the release of such Subsidiary Guarantor from its
obligations under its Subsidiary Guarantee endorsed on the Notes and under this Article 4. 


    Except
as set forth in Article 3 hereof and this Section 4.04, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor or shall prevent any sale or conveyance of the property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Guarantor. 


    Section 4.05.  Waiver of Subrogation. 


    Each
Subsidiary Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company or any of its Subsidiaries that arise from the
existence, payment, performance or enforcement of such Subsidiary Guarantor's obligations under this Subsidiary
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 Company or any of its Subsidiaries, 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 Company or any of its Subsidiaries, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to any Subsidiary 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 Subsidiary Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Notes, 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 Subsidiary Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 4.05 is knowingly made in contemplation of such benefits. 


31





 
ARTICLE FIVE  


 Miscellaneous  


    Section 5.01. Events of Default. Sections 5.01 and 5.02 of the Indenture are hereby replaced in their
entirety by the following: 



    (a)  "Event
of Default," wherever used herein, means any of the following events (whatever the reason for such Event of Default and whether it will be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 



     (i) the
failure by the Company to pay interest on any Note when the same becomes due and payable and the continuance of any such failure for a period of 30 days; 


    (ii) the
failure by the Company to pay the principal or premium of any Note when the same becomes due and payable at maturity, upon acceleration or otherwise (including
the failure to make payment pursuant to a Change of Control Offer, a Net Worth Offer or an Excess Proceeds Offer); 


    (iii) the
failure by the Company or any of its Subsidiaries to comply with any of its agreements or covenants in, or provisions of, the Notes, the Subsidiary Guarantees
or this Indenture and such failure continues for the period and after the notice specified below; 


    (iv) the
acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any of its Subsidiaries that has an outstanding principal
amount of $3,000,000 or more in the aggregate; 


    (v) the
failure by the Company or any of its Subsidiaries to make any principal or interest payment in respect of Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any of its Subsidiaries with an outstanding aggregate amount of $3,000,000 or more within five days of such principal or interest payment becoming due and payable
(after giving effect to any applicable grace period set forth in the documents governing such Indebtedness); 


    (vi) a
final judgment or judgments that exceed $3,000,000 or more in the aggregate, for the payment of money, having been entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries and such judgment or judgments is not satisfied, stayed, annulled or rescinded within 60 days of being entered; 


   (vii) the
Company or any Material 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 property, or 


    (D)  makes
a general assignment for the benefit of its creditors; 




   (viii) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 



    (A)  is
for relief against the Company or any Material Subsidiary as debtor in an involuntary case, 





32





 




    (B)  appoints a Custodian of the Company or any Material Subsidiary or a Custodian for all or substantially all of the property of the Company or any Material
Subsidiary, or 


    (C)  orders
the liquidation of the Company or any Material Subsidiary and the order or decree remains unstayed and in effect for 60 days; or 




    (ix) any
Subsidiary Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guarantee and this Indenture) or is
declared null and void and unenforceable or found to be invalid or any Subsidiary Guarantor denies its liability under its Subsidiary Guarantee (other than by reason of release of a Subsidiary
Guarantor from its Subsidiary Guarantee in accordance with the terms of this Indenture and the Subsidiary Guarantee). 




    (b)  The
Trustee will not be deemed to know of a Default unless a Trust Officer has actual knowledge of such Default or receives written notice of such Default with
specific reference to such Default. 


    (c)  A
Default under Section 5.01(a)(iii) hereof will not be deemed an Event of Default until the Trustee notifies the Company, or the Holders of at least
25 percent in principal amount of the then outstanding Notes notify the Company and the Trustee, of the Default and the Company does not cure the Default within 60 days after receipt of
the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." If such a Default is cured within such time period, it ceases. 


    (d)  If
an Event of Default (other than an Event of Default with respect to the Company specified in clause (vii) or (viii) of Section 5.01(a)
hereof) shall have occurred and be continuing under this Indenture, the Trustee by notice to the Company, or the Holders of at least 25 percent in principal amount of the Notes then outstanding
by notice to the Company and the Trustee, may declare all Notes to be due and payable immediately. Upon such declaration of acceleration, the amounts due and payable on the Notes, as determined in
Section 5.01(e) hereof, will be due and payable immediately. If an Event of Default with respect to the Company specified in clause (vii) or (viii) of Section 5.01(a)
hereof occurs, such an amount will ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the
Trustee and the Company or any Holder. The Holders of a majority in principal amount of the Notes then outstanding by written notice to the Trustee and the Company may waive such Default or Event of
Default (other than any Default or Event of Default in payment of principal or interest) on the Notes under this Indenture. Holders of a majority in principal amount of the then outstanding Notes may
rescind an acceleration and its consequences (except an acceleration due to nonpayment of principal or interest on the Notes) if the rescission would not conflict with any judgment or decree and if
all existing Events of Default have been cured or waived. 


    (e)  In
the event that the maturity of the Notes is accelerated pursuant to Section 5.01(d) hereof, 100 percent of the principal amount of the Notes (or,
in the case of a default under Section 5.01(b)(ii) or (iii) hereof resulting from a breach of the covenant set forth in Section 3.06 hereof, 101 percent of the
principal amount of the Notes) will become due and payable plus accrued interest, if any, to the date of payment. 




    Section 5.02.
Amendment, Supplement and Waiver. 


    Subject
to certain exceptions this Indenture Supplement or the Notes may be amended or supplemented 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 or Event of Default (other than any continuing
Default or Event of Default in the payment of interest on or the principal of the Notes) under, or compliance 


33





 


with any provision of, the Indenture or this Indenture Supplement may be waived 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. Without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee may amend this Indenture
Supplement or the Notes or waive any provision of the Indenture to cure any ambiguity, defect or inconsistency, to comply with Section 3.11; to provide for uncertificated Notes in addition to
certificated Notes; to make any change that does not adversely affect the legal rights under this Indenture Supplement of any Holder; to comply with or qualify the Indenture under the Trust Indenture
Act; or to reflect a Subsidiary Guarantor ceasing to be liable on the Subsidiary Guarantees because it is no longer a Subsidiary of the Company. 



    Without
the consent of each Holder affected, the Company may not 



     (i) reduce
the amount of Notes whose Holders must consent to an amendment, supplement or waiver, 


    (ii) reduce
the rate of or change the time for payment of interest, including default interest, on any Note, 


    (iii) reduce
the principal of or change the fixed maturity of any Note or alter the provisions with respect to redemption under the "Optional Redemption" section set
forth in the Notes or with respect to
mandatory offers to repurchase Notes pursuant to Sections 3.01, 3.06 and 3.10 of this Supplemental Indenture Supplement, 


    (iv) make
any Note payable in money other than that stated in the Note, 


    (v) make
any change in the "Waiver of Past Defaults" or "Unconditional Right of Holders to Receive Principal, Premium, If Any, Interest and Additional Amounts" sections
set forth in the Indenture, 


    (vi) modify
the ranking or priority of the Notes or any Subsidiary Guarantee, 


   (vii) release
any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture otherwise than in accordance with the terms of the
Indenture, or 


   (viii) waive
a continuing Default or Event of Default in the payment of principal of or interest on the Notes. 




    The
right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent
otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance with the terms of the Indenture. 



    Section 5.03.  Indenture. 


    In
the event of any conflict between this Supplemental Indenture and the Indenture, the provisions of this Supplemental Indenture shall prevail. 


    Section 5.04.
Governing Law. 


    The
laws of the State of New York shall govern this Supplemental Indenture, the Securities of each Series and the Guarantees. 


    Section 5.05.
No Adverse Interpretation of Other Agreements. 



    This
Supplemental Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not
be used to interpret this Supplemental Indenture. 


34





 


    Section 5.06. Successors and Assigns. 



    All
covenants and agreements of the Company and the Subsidiary Guarantors in this Supplemental Indenture and the Notes shall bind its successors and assigns. All agreements of the
Trustee in this Supplemental Indenture shall bind its successors and assigns. 


    Section 5.07.
Duplicate Originals. 


    The
parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 


    Section 5.08.
Severability. 


    In
case any one or more of the provisions contained in this Supplemental Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provisions of this Supplemental Indenture or of the Notes. 


35





 
SIGNATURES  


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



	 	 	BEAZER HOMES USA, INC.
	

 	
 	

By:	
 	

/s/ DAVID S. WEISS   
 Name: David S. Weiss

Title: Executive Vice President
	

 	
 	

GUARANTORS:
	

 	
 	

BEAZER HOMES CORP.

BEAZER/SQUIRES REALTY, INC.

BEAZER HOMES SALE ARIZONA INC.

BEAZER REALTY CORP.

BEAZER MORTGAGE CORPORATION

BEAZER HOMES HOLDINGS CORP.

BEAZER HOMES TEXAS HOLDINGS, INC.

BEAZER HOMES TEXAS, L.P.
	

 	
 	

By:	
 	

/s/ DAVID WEISS   

	 	 	 	 	Title:	 	Authorized Officer





	U.S. BANK TRUST NATIONAL ASSOCIATION,

as Trustee	 	 	 	 
	

By:	
 	

/s/ JULIE EDDINGTON   
 Name: Julie Eddington

Title: Assistant Vice President

	
 	

 	
 	

 




36






  



 
 

EXHIBIT A
  
    FORM OF REDEEMABLE SECURITY
  [Face of Security]    
  


    Unless this Security is presented by an authorized representative of The Depository Trust Company ("DTC"), 55 Water Street, New York, New York to the Company
or its agent for registration of transfer, exchange or payment, and such Security issued is registered in the name of CEDE & CO., or such other name as 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, since the registered owner hereof, CEDE & CO., has an interest herein. 


    Unless
and until this Security is exchanged in whole or in part for Securities in certificated form, this Security may not be transferred except as a whole by DTC to a nominee thereof
or by a nominee thereof to DTC or another nominee of DTC or by DTC or any such nominee to a successor of DTC or a nominee of such successor. 


BEAZER HOMES USA, INC.

85/8% Senior Note Due 2011 



	No.	 	$           





    BEAZER
HOMES USA, INC., a Delaware corporation (therein referred to as the "Company," which term includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to            or registered assigns the principal sum of      Dollars on May 15, 2011 (the
"Stated Maturity
Date") and to pay interest thereon from May 21, 2001 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on
May 15 and November 15 in each year (each, an "Interest Payment Date"), commencing November 15, 2001, at the rate of 85/8% per annum, until the principal hereof is
paid or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will,
as provided in such Indenture, be paid to the Holder in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest, which shall be the May 1 or November 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date at the office or agency of the Company
maintained for such purpose; provided, however, that such interest may be paid, at the Company's option, by mailing a check to such Holder at its
registered address or by transfer of funds to an account maintained by such Holder within the United States. Any such interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may be paid to the Holder in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the Indenture Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. 


    The
principal of this Security payable on the Stated Maturity Date or the principal of, premium, if any, and, if the Redemption Date is not an Interest Payment Date, interest on this
Security payable on the Redemption Date will be paid against presentation of this Security at the office or agency of the Company maintained for that purpose in New York, New York, in such coin or
currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. 


A–1





 


    Interest payable on this Security on any Interest Payment Date and on the Stated Maturity Date will include interest accrued from and including the next preceding Interest Payment
Date in respect of which interest has been paid or duly provided for (or from and including May 21, 2001, if no interest has been paid on this Security) to but excluding such Interest Payment
Date or the Stated Maturity Date. If any Interest Payment Date or the Stated Maturity Date falls on a day that is not a Business Day, as defined below, principal, premium, if any, and/or interest
payable with respect to such Interest Payment Date or Stated Maturity Date will be paid on the next succeeding Business Day with the same force and effect as if it were paid on the date such payment
was due, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Stated Maturity Date. "Business Day" means any day, other than a Saturday or
Sunday, on which banks in New York, New York are not required or authorized by law or executive order to close. 


    All
payments of principal, premium, if any, and interest in respect of this Security will be made by the Company in immediately available funds. 



    Reference
is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set
forth at this place. 


    Unless
the Certificate of Authentication hereon has been executed by the Indenture Trustee by manual signature of one of its authorized signatories, this Security shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. 


    IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its facsimile corporate seal. 



	Dated:	 	 	 	BEAZER HOMES USA, INC.
	 	 	
	 	 	 	 
	

 	
 	

 	
 	

 	
 	

 
	 	 	 	 	By:	 	 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

 	
 	

 
	Attest:	 	 	 	 	 	 
	

 	
 	

 	
 	

 	
 	

 
	
	 	 	 	 
	 	 	 	 	Secretary




A–2





 
CERTIFICATE OF AUTHENTICATION  


    This is one of the Securities designated as the "85/8% Senior Notes Due 2011" under the within-mentioned Indenture 



	 	 	 	 	U.S. BANK TRUST NATIONAL ASSOCIATION
	

 	
 	

 	
 	

 	
 	

 
	 	 	 	 	By:	 	 
	 	 	 	 	 	 	
 An Authorized Signatory




A–3





 
[Reverse of Security] 


BEAZER
HOMES USA, INC. 


    This
Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated
as of May 21, 2001 (as the same has been supplemented by the First Supplemental Indenture dated as of May 21, 2001(the "Supplemental Indenture") by and among the Company, the guarantors
named therein and the Indenture Trustee (as defined herein), the "Indenture") between the Company and U.S. Bank Trust National Association, as Indenture Trustee (herein called the "Indenture Trustee,"
which term includes any successor trustee under the Indenture with respect to the series of which this Security is a part), to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Indenture Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the duly authorized series of Securities designated on the face hereof (collectively, the
"Securities"), and the aggregate principal amount of the Securities to be issued under such series is not limited, and subject to compliance with the terms of the Indenture, the Company may, at its
option, without consent from the Holders, issue additional Notes from time to timeAll terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the
Indenture. 


    If
an Event of Default, as defined in the Indenture, shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture. 


    The
Securities are subject to redemption at any time on or after May 15, 2006, as a whole or in part, at the election of the Company, at the following Redemption Prices
(expressed as a percentage of the principal amount) if redeemed during the 12-month period beginning on May 15 of the years indicated at the Redemption Prices indicated below. 



	Year
 
	 	Redemption Price
	 
	2006	 	104.3125	%
	2007	 	102.8750	%
	2008	 	101.4375	%






and
thereafter at a Redemption Price equal to 100.0% of the principal amount, together in the case of any such redemption with accrued interest to the Redemption Date;  provided, however, that installments
of interest on this Security whose Stated Maturity is on or prior to such Redemption Date will be payable to the
Holder of this Security, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. 


    In
addition, on or prior to May 15, 2004, the Company may, at its option, redeem up to 35% of the outstanding Securities with the net proceeds of an Equity Offering at
108.6250% of the principal amount thereof plus accrued and unpaid interest, if any, to the date fixed for redemption; provided, that at least
$130 million principal amount of the Securities remain outstanding after such redemption. 


    Notice
of redemption will be given by mail to Holders of Securities, not less than 15 nor more than 60 days prior to the Redemption Date, all as provided in the Indenture. 


    In
the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof. 


    The
Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the
Holders of the 


A–4





 


Securities under the Indenture at any time by the Company and the Indenture Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of all Securities
issued under the Indenture at the time Outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority of the aggregate principal amount of
the
Outstanding Securities, on behalf of the Holders of all such Securities, to waive compliance by the Company with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit
the Holders of not less than a majority of the aggregate principal amount, in certain instances, of the Outstanding Securities of any series to waive, on behalf of all of the Holders of Securities of
such series, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and other Securities issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security. 


    No
reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed. 


    As
provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register of the Company upon surrender
of this Security for registration of transfer at the office or agency of the Company in any place where the principal of (and premium, if any) and interest on this Security are payable, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or by his attorney duly authorized in writing,
and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 


    As
provided in the Indenture and subject to certain limitations therein set forth, this Security is exchangeable for a like aggregate principal amount of Securities of different
authorized denominations but otherwise having the same terms and conditions, as requested by the Holder hereof surrendering the same. 


    The
Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. 



    No
service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. 


    Prior
to due presentment of this Security for registration of transfer, the Company, the Indenture Trustee and any agent of the Company or the Indenture Trustee may treat the Person
in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Indenture Trustee nor any such agent shall be
affected by notice to the contrary. 


    No
recourse shall be had for the payment of the principal of or premium, if any, or the interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture supplemental thereto, against any past, present or future shareholder, employee, officer or director, as such, of the Company or of any
successor, either directly or through the Company or any successor, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as party of the consideration for the issue hereof, expressly waived and released. 


A–5





 


    The Indenture and the Securities shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed
entirely in such State. 


A–6






   EXHIBIT B  


 FORMS OF CERTIFICATION  


B–1






   EXHIBIT B-1



FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED

TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST

PAYABLE PRIOR TO THE EXCHANGE DATE  


CERTIFICATE  


    [Insert title or sufficient description of Securities to be delivered] 



    This
is to certify that, as of the date hereof, and except as set forth below, the above-captioned Securities held by you for your account (i) are owned by person(s) that are
not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless
of its source ("United States person(s)"), (ii) are owned by United States person(s) that are (a) foreign branches of United States financial institutions (financial institutions, as
defined in the United States Treasury Regulations Section 2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States
financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may
advise Beazer Homes USA, Inc. or its agent that such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the United States
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or foreign financial institution
described in clause (iii) above (whether or not also described in clause (i) or (ii), this is to further certify that such financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. 


    As
used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. 


    We
undertake to advise you promptly by tested telex or electronic transmission on or prior to the date on which you intend to submit your certification relating to the above-captioned
Securities held by you for our account in accordance with your Operating Procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may
be assumed that this certification applied as of such date. 


    This
certificate excepts and does not relate to [U.S.$] of such interest in the above-captioned Securities in respect of which we are not able to certify and
as to which we understand an exchange for an interest in a permanent Global Security or an exchange for and delivery of definitive Securities (or, if relevant, collection of any interest) cannot be
made until we do so certify. 


    We
understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened
in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. 


B–1–1





 


Dated:                         ,             

[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii) the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable] 



	 	 	[Name of Person Making Certification]
	

 	
 	

 
	 	 	
 (Authorized Signature)
	 	 	Name:
	 	 	Title:




B–1–2






   EXHIBIT B-2  


 FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR

AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF

A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO

OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE

CERTIFICATE  


[Insert
title or sufficient description of Securities to be delivered] 


    This
is to certify that, based solely on written certifications that we have received in writing, by tested telex or by electronic transmission from each of the persons appearing in
our records as persons entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially in the form attached hereto, as of the date hereof,
[U.S.$] principal amount of the above-captioned Securities (i) is owned by person(s) that are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States person(s)"), (ii) is owned by
United States person(s) that are (a) foreign branches of United States financial institutions (financial institutions, as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing for their own account or for resale, or (b) United States person(s) who
acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either
case (a) or (b), each such financial institution has agreed, on its own behalf or through its agent, that we may advise Beazer Homes USA, Inc. or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) is owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in United States Treasury Regulations
Section 1.163- 5(c)(2)(i)(D)(7)), and, to the further effect, that financial institutions described in clause (iii) above (whether or not also described in clause (i)
or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. 


    As
used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "Possessions" include Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. 


    We
further certify that (i) we are not making available herewith for exchange (or, if relevant, collection of any interest) any portion of the temporary Global Security
representing the above-captioned Securities excepted in the above-referenced certificates of Member Organizations and (ii) as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, collection of
any interest) are no longer true and cannot be relied upon as of the date hereof. 


B–2–1





 


    We understand that this certification is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened
in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. 


Dated:                         

[To be dated no earlier than the Exchange Date or the relevant Interest Payment Date occurring prior to the Exchange Date, as applicable] 



	 	 	[Morgan Guaranty Trust Company

of New York, Brussels Office,] as Operator of the Euroclear System [CEDEL S.A.]
	

 	
 	

By:	

  





B–2–2






   EXHIBIT C



[FORM OF SUBSIDIARY GUARANTEE]  


    For value received, each of the undersigned hereby, jointly and severally, unconditionally guarantees to the Holder of this Security the payments of principal
of, premium, if any, and interest on this Security in the amounts and at the time when due and interest on the overdue principal, premium, if any, and interest, if any, of this Security, if lawful,
and the payment or performance of all other obligations of the Company under the Indenture or the Securities, to the Holder of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security, Article 4 of the Supplemental Indenture, the Indenture and this Subsidiary Guarantee. This Subsidiary Guarantee will become effective in accordance with
Article 4 of the Supplemental Indenture and its terms shall be evidenced therein. The validity and enforceability of any Subsidiary Guarantee shall not be affected by the fact that it is not
affixed to any particular Security. 


    The
obligations of the undersigned to the Holders of Securities and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth in Article 4
of the Supplemental Indenture and reference is hereby made to the Indenture for the precise terms of the Subsidiary Guarantee and all of the other provisions of the Indenture to which this Subsidiary
Guarantee relates. 


    This
Subsidiary Guarantee is subject to release upon the terms set forth in the Indenture. 



	 	 	BEAZER HOMES CORP.

BEAZER/SQUIRES REALTY, INC.

BEAZER HOMES SALE ARIZONA INC.

BEAZER REALTY CORP.

BEAZER MORTGAGE CORPORATION

BEAZER HOMES HOLDINGS CORP.

BEAZER HOMES TEXAS HOLDINGS, INC.

BEAZER HOMES TEXAS, L.P.
	

 	
 	

By:	

 
	 	 	 	

	 	 	 	Title: Authorized Officer




C–1









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EXHIBIT A FORM OF REDEEMABLE SECURITY [Face of Security]