Document:

Exhibit 4.26

                                  ATTACHMENT A

                        Powers, Designations, Preferences
        and Relative, Participating, Optional or Other Special Rights of
            and the Qualifications, Limitations or Restrictions Upon

                            GLOBAL TECHNOLOGIES, LTD.
                     SERIES E 8% CONVERTIBLE PREFERRED STOCK

     Section 1. DESIGNATION, AMOUNT AND PAR VALUE. The series of preferred stock
shall be  designated  as Global  Technologies,  Ltd.'s  Series E 8%  Convertible
Preferred Stock (the  "PREFERRED  STOCK") and the number of shares so designated
shall be 250 (which shall not be subject to increase  without the consent of the
holders  of  the  Preferred  Stock  (each,  a  "HOLDER"  and  collectively,  the
"HOLDERS")).  Each share of Preferred Stock shall have a par value of $.01 and a
stated value equal to the sum of $10,000 plus all accrued  dividends to the date
of  determination  to the extent not previously  paid in cash in accordance with
the terms hereof (the "STATED VALUE").

     Section 2. DIVIDENDS.

     (a) Holders shall be entitled to receive,  out of funds  legally  available
therefor,  and the Company shall pay, cumulative dividends at the rate per share
(as a percentage of the Stated Value per share) of 8% per annum, payable on each
December 31, March 31, June 30 and  September 30 for so long as such share shall
be  outstanding,  commencing June 30, 2001 (each such quarterly date is referred
to herein as a "DIVIDEND  PAYMENT DATE"),  in cash or by accretion of the Stated
Value.  Subject to the terms and  conditions  herein,  the  decision  whether to
accrete dividends  hereunder to the Stated Value or to pay for dividends in cash
shall be at the discretion of the Company. The Company shall provide the Holders
written  notice of its  intention to accrete  dividends  hereunder to the Stated
Value or pay  dividends  in cash not less than ten days  prior to each  Dividend
Payment  Date for so long as shares of  Preferred  Stock  are  outstanding  (the
Company may indicate in such notice that the  election  contained in such notice
shall continue for later periods until revised).  Failure to timely provide such
written  notice  shall be deemed (if  permitted  hereunder)  an  election by the
Company to accrete  dividends  hereunder to the Stated  Value.  Dividends on the
Preferred Stock shall be calculated on the basis of a 365-day year, shall accrue
daily commencing on the Original Issue Date (as defined in Section 8), and shall
be deemed to accrue from such date whether or not earned or declared and whether
or not  there  are  profits,  surplus  or  other  funds of the  Company  legally
available for the payment of dividends.  Except as otherwise provided herein, if
at any time the  Company  pays  less than the total  amount  of  dividends  then
accrued on account of the Preferred  Stock,  such payment  shall be  distributed
ratably  among the Holders  based upon the number of shares of  Preferred  Stock
held by each Holder.  Any  dividends to be paid in cash  hereunder  that are not
paid within  three  Trading  Days (as defined in Section 8) following a Dividend
Payment Date shall continue to accrue and shall entail a late fee, which must be
paid in cash,  at the rate of 18% per  annum or the  lesser  rate  permitted  by

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applicable  law (such fees to accrue  daily,  from the date such dividend is due
hereunder through and including the date of payment).

     (b) Notwithstanding  anything to the contrary contained herein, the Company
must pay dividends in cash if:

          (i) the number of shares of Common  Stock (as defined in Section 8) at
the time authorized, unissued and unreserved for all purposes is insufficient to
accrete such  dividends to the Stated Value to permit  conversion in full of all
outstanding Stated Value; or

          (ii)  the  accretion  of  such  dividends  to  the  Stated  Value  and
subsequent  conversions of all then  outstanding  Stated Value would result in a
violation  of Section  5(a)(ii) or the rules of the Nasdaq  Stock  Market or any
other rules and regulations  governing any other market or exchange on which the
Common Stock is then listed or quoted for trading.

     (c) So long as any Preferred  Stock shall remain  outstanding,  neither the
Company nor any subsidiary  thereof shall redeem,  purchase or otherwise acquire
directly  or  indirectly  any Junior  Securities  (as defined in Section 8), nor
shall the Company directly or indirectly pay or declare any dividend or make any
distribution  (other than a dividend or  distribution  described in Section 5 or
dividends due and paid in the ordinary  course on preferred stock of the Company
at such  times when the  Company is in  compliance  with its  payment  and other
obligations  hereunder),  nor shall any  distribution be made in respect of, any
Junior  Securities,  nor shall any  monies  be set aside for or  applied  to the
purchase  or  redemption  (through a sinking  fund or  otherwise)  of any Junior
Securities or shares pari passu with the Preferred Stock.

     Section  3.  VOTING  RIGHTS.  Except as  otherwise  provided  herein and as
otherwise  required by law,  the  Preferred  Stock shall have no voting  rights.
However,  so long as any shares of Preferred Stock are outstanding,  the Company
shall not,  without  the  affirmative  vote of the  Holders of a majority of the
shares of the Preferred Stock then  outstanding,  (a) alter or change  adversely
the powers, preferences or rights given to the Preferred Stock or alter or amend
this  Certificate  of  Designation,  (b)  authorize or create any class of stock
ranking as to dividends or distribution of assets upon a Liquidation (as defined
in Section 4) senior to or otherwise  pari passu with the Preferred  Stock,  (c)
amend its certificate or articles of incorporation or other charter documents so
as to affect  adversely any rights of the Holders,  (d) increase the  authorized
number of shares of  Preferred  Stock,  or (e)  enter  into any  agreement  with
respect to the foregoing.

     Section 4. LIQUIDATION. Upon any liquidation,  dissolution or winding-up of
the Company,  whether  voluntary or involuntary (a  "LIQUIDATION"),  the Holders
shall be  entitled  to receive out of the assets of the  Company,  whether  such
assets are capital or surplus, for each share of Preferred Stock an amount equal
to the Stated Value per share before any  distribution  or payment shall be made
to the holders of any Junior Securities,  and if the assets of the Company shall
be  insufficient  to pay in full  such  amounts,  then the  entire  assets to be
distributed  to the Holders shall be  distributed  among the Holders  ratably in
accordance  with the respective  amounts that would be payable on such shares if
all amounts payable thereon were paid in full. A sale, conveyance or disposition
of 50% or more of the assets of the Company or the  effectuation  by the Company

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of a transaction or series of related transactions in which more than 33% of the
voting power of the Company is disposed of, or a consolidation  or merger of the
Company with or into any other company or companies  into one or more  companies
not  wholly-owned  by the  Company  shall not be treated as a  Liquidation,  but
instead shall be subject to the  provisions of Section 5. The Company shall mail
written  notice  of any such  Liquidation,  not less  than 45 days  prior to the
payment date stated therein, to each record Holder.

     Section 5. CONVERSION.

     (a)  (i)  CONVERSIONS  AT OPTION OF HOLDER.  Each share of Preferred  Stock
shall be convertible into shares of Common Stock (subject to the limitations set
forth in Section  5(a)(ii)),  at the Conversion Ratio (as defined in Section 8),
at the option of the Holder at any time and from time to time from and after the
Original  Issue Date.  Holders  shall effect  conversions  by  surrendering  the
certificate or  certificates  representing  the shares of Preferred  Stock to be
converted to the Company,  together with the form of conversion  notice attached
hereto as  EXHIBIT A (a  "CONVERSION  NOTICE").  Each  Conversion  Notice  shall
specify the number of shares of Preferred  Stock to be converted and the date on
which such conversion is to be effected, which date may not be prior to the date
the Holder  delivers  such  Conversion  Notice  (including  by  facsimile)  (the
"CONVERSION  DATE"). If no Conversion Date is specified in a Conversion  Notice,
the  Conversion  Date  shall be the date  that a  Conversion  Notice  is  deemed
delivered  hereunder.  If the  Holder  is  converting  less  than all  shares of
Preferred Stock  represented by the certificate or certificates  tendered by the
Holder  with the  Conversion  Notice,  or if a  conversion  hereunder  cannot be
effected in full for any  reason,  the Company  shall  promptly  deliver to such
Holder  (in the  manner  and  within  the time  set  forth  in  Section  5(b)) a
certificate  representing  the number of shares of  Preferred  Stock as have not
been converted.

          (ii)  CONVERSION  RESTRICTION.  Unless (i) permitted by the applicable
rules and  regulations  of the principal  securities  market on which the Common
Stock is listed  or traded or (ii) the  Company  has  obtained  approval  of the
shareholders  of the Company of the issuance of the Common Stock upon conversion
of the  Preferred  Stock in  accordance  with  applicable  law and the rules and
regulations  of any  stock  exchange,  interdealer  quotation  system  or  other
self-regulatory  organization  with  jurisdiction over the Company or any of its
securities (the "SHAREHOLDER  APPROVAL"),  in no event shall the total number of
shares of Common Stock issued upon conversion of the Preferred Stock  (including
any shares of capital stock or rights to acquire  shares of capital stock issued
by the Company which are  aggregated or integrated  with the Common Stock issued
or issuable upon conversion of the Preferred Stock for purposes of any such rule
or  regulation)  exceed the  maximum  number of shares of Common  Stock that the
Company  can so  issue  pursuant  to any  rule of the  principal  United  States
securities  market on which the Common Stock trades  (including  Rule 4350(i) of
the Nasdaq Stock Market or any successor rule) (the "ISSUABLE  MAXIMUM")  which,
as of the Original Issue Date, shall be 2,316,466 (19.99% of the total shares of
Common  Stock  outstanding  on the Original  Issue  Date),  subject to equitable
adjustments from time to time for stock splits,  stock dividends,  combinations,
capital  reorganizations  and  similar  events  relating  to  the  Common  Stock
occurring  after the Original  Issue Date.  In the event that (a) the  aggregate
number  of shares  of  Common  Stock  actually  issued  upon  conversion  of the
Preferred Stock  represents at least 50% of the Issuable Maximum and (b) the sum
of (x) the  aggregate  number of shares of Common  Stock  actually  issued  upon

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conversion of the outstanding  Preferred Stock plus (y) the aggregate  number of
shares of Common Stock that remain  issuable upon  conversion of Preferred Stock
at the then effective Conversion Price,  represents at least one hundred percent
(100%) of the Issuable  Maximum (the "Triggering  Event"),  the Company will use
its best efforts to seek and obtain  Shareholder  Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Issuable Maximum) as
soon as practicable following the Triggering Event.

     (b) Not later than three  Trading  Days after  each  Conversion  Date,  the
Company  will  deliver  to  the  Holder  (A)  a  certificate   or   certificates
representing  the  number  of shares of Common  Stock  being  acquired  upon the
conversion  of  shares  of  Preferred  Stock,  (B)  one  or  more   certificates
representing  the number of shares of Preferred  Stock not  converted  and (C) a
bank check in the amount of accrued  and unpaid  dividends  (if the  Company has
elected or is required to pay accrued  dividends in cash).  Notwithstanding  the
foregoing or anything to the contrary contained herein, the Company shall not be
obligated to issue  certificates  evidencing the shares of Common Stock issuable
upon  conversion  of any shares of  Preferred  Stock until one Trading Day after
certificates  evidencing  such  shares  of  Preferred  Stock are  delivered  for
conversion to the Company,  or the Holder of such  Preferred  Stock notifies the
Company that such  certificates have been lost, stolen or destroyed and provides
a bond (or other adequate  security)  reasonably  satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection  therewith.  If
in the case of any Conversion  Notice such  certificate or certificates  are not
delivered to or as directed by the  applicable  Holder by the third  Trading Day
after the  Conversion  Date,  the Holder  shall be  entitled to elect by written
notice to the Company at any time on or before its  receipt of such  certificate
or  certificates  thereafter,  to rescind  such  conversion,  in which event the
Company shall  immediately  return the  certificates  representing the shares of
Preferred Stock tendered for conversion.

     (c)  (i) The conversion  price for each share of Preferred  Stock in effect
on any Conversion Date shall be the Per Share Market Value on the Original Issue
Date, i.e., $0.3125 (the "CONVERSION PRICE").

          (ii) If the Company,  at any time while any shares of Preferred  Stock
are outstanding, shall (a) pay a stock dividend or otherwise make a distribution
or  distributions  on shares of its Junior  Securities or pari passu  securities
payable in shares of Common Stock,  (b) subdivide  outstanding  shares of Common
Stock into a larger number of shares,  (c) combine  outstanding shares of Common
Stock into a smaller  number of  shares,  or (d) issue by  reclassification  and
exchange of the Common Stock any shares of capital  stock of the  Company,  then
the  Conversion  Price shall be  multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding  before such event and
of  which  the  denominator  shall be the  number  of  shares  of  Common  Stock
outstanding  after such event.  Any  adjustment  made  pursuant to this  Section
5(c)(ii)  shall  become  effective  immediately  after the  record  date for the
determination of stockholders  entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.  Whenever the Conversion Price is
adjusted  pursuant to this Section  5(c)(ii) the Company shall  promptly mail to
each Holder,  a notice setting forth the Conversion  Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.

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          (iii)  All  calculations  under  this  Section  5 shall be made to the
nearest cent or the nearest  1/100th of a share,  as the case may be. The number
of shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company,  and the  disposition of any
such shares shall be considered an issue or sale of Common Stock.

          (iv) In case  of any  reclassification  of the  Common  Stock,  or any
compulsory  share exchange  pursuant to which the Common Stock is converted into
other  securities,  cash or property,  the Holders of the  Preferred  Stock then
outstanding  shall have the right  thereafter  to convert  such  shares into the
shares of stock and  other  securities,  cash and  property  receivable  upon or
deemed to be held by holders of Common Stock following such  reclassification or
share  exchange,  and the Holders of the Preferred  Stock shall be entitled upon
such event to receive such amount of securities, cash or property as a holder of
the number of shares of Common  Stock of the  Company  into which such shares of
Preferred   Stock  could  have  been   converted   immediately   prior  to  such
reclassification  or share  exchange  would have been  entitled.  This provision
shall similarly apply to successive reclassifications or share exchanges.

          (v) In case of any merger or consolidation of the Company with or into
another  Person,  or sale by the Company of more than  one-half of the assets of
the Company (on an as-valued basis) in one or a series of related  transactions,
a Holder  shall have the right  thereafter  to convert  its shares of  Preferred
Stock  into the  shares  of  stock  and  other  securities,  cash  and  property
receivable  upon or deemed to be held by holders of Common Stock  following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of  related  events to receive  such  amount of  securities,  cash and
property as the shares of Common Stock into which such shares of Preferred Stock
could have been converted  immediately  prior to such merger,  consolidation  or
sales would have been entitled.

          (vi) If (a)  the  Company  shall  declare  a  dividend  (or any  other
distribution)  on the Common  Stock,  (b) the  Company  shall  declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock,  (c) the
Company  shall  authorize  the granting to all holders of Common Stock rights or
warrants to subscribe  for or purchase any shares of capital  stock of any class
or of any rights,  (d) the approval of any  stockholders of the Company shall be
required  in  connection  with any  reclassification  of the Common  Stock,  any
consolidation or merger to which the Company is a party, any sale or transfer of
all or substantially  all of the assets of the Company,  of any compulsory share
of exchange whereby the Common Stock is converted into other securities, cash or
property,  or (e) the Company  shall  authorize  the  voluntary  or  involuntary
dissolution,  liquidation or winding up of the affairs of the Company;  then the
Company  shall  notify the Holders at their last  addresses as they shall appear
upon the stock  books of the  Company,  at least 30  calendar  days prior to the
applicable record or effective date hereinafter  specified, a notice stating (x)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the  holders of Common  Stock of record to be  entitled  to
such  dividend,  distributions,   redemption,  rights  or  warrants  are  to  be
determined  or (y)  the  date on  which  such  reclassification,  consolidation,
merger,  sale,  transfer or share  exchange is expected to become  effective  or
close,  and the date as of which it is expected  that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities,  cash or
other property deliverable upon such  reclassification,  consolidation,  merger,

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sale,  transfer or share  exchange.  Holders are  entitled to convert  shares of
Preferred  Stock during the 30-day period  commencing the date of such notice to
the effective date of the event triggering such notice.

     (d) The  Company  covenants  that it will at all  times  reserve  and  keep
available out of its authorized  and unissued  shares of Common Stock solely for
the purpose of issuance upon conversion of Preferred Stock, free from preemptive
rights or any other actual contingent  purchase rights of persons other than the
Holders,  not less  than such  number  of  shares  of  Common  Stock as shall be
issuable  (taking into account the  provisions of Section 5(a) and Section 5(c))
upon the conversion of all outstanding  shares of Preferred  Stock.  The Company
covenants that all shares of Common Stock that shall be so issuable shall,  upon
issue,   be  duly  and  validly   authorized  and  issued  and  fully  paid  and
nonassessable.

     (e) Upon a conversion  hereunder the Company shall not be required to issue
stock certificates  representing fractions of shares of Common Stock, but may if
otherwise  permitted,  make a cash payment in respect of any final fraction of a
share based on the Per Share  Market  Value at such time.  If any fraction of an
Underlying Share would,  except for the provisions of this Section,  be issuable
upon a conversion  hereunder,  the Company  shall pay an amount in cash equal to
the Conversion Ratio multiplied by such fraction.

     (f) The  issuance  of  certificates  for  Common  Stock  on  conversion  of
Preferred  Stock shall be made  without  charge to the  Holders  thereof for any
documentary  stamp or similar  taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Company shall not be required
to pay any tax that may be payable in respect of any  transfer  involved  in the
issuance and delivery of any such  certificate  upon  conversion in a name other
than that of the Holder of such shares of Preferred Stock so converted.

     (g) Shares of Preferred  Stock  converted  into Common Stock or redeemed in
accordance with the terms hereof shall be canceled and may not be reissued.

     (h) Any  and all  notices  or  other  communications  or  deliveries  to be
provided by the Holders of the Preferred  Stock  hereunder,  including,  without
limitation, any Conversion Notice, shall be in writing and delivered personally,
by facsimile  or sent by a  nationally  recognized  overnight  courier  service,
addressed to the  attention of the General  Counsel of the Company  addressed to
1811  Chestnut  Street,  Suite  120,  Philadelphia,  Pennsylvania  19103  or  to
facsimile number (215) 972-8183, or to such other address or facsimile number as
shall be  specified  in writing by the  Company  for such  purpose.  Any and all
notices or other  communications  or  deliveries  to be  provided by the Company
hereunder shall be in writing and delivered personally,  by facsimile or sent by
a nationally  recognized overnight courier service,  addressed to each Holder at
the facsimile  telephone number or address of such Holder appearing on the books
of the Company,  or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other communication
or deliveries  hereunder  shall be deemed given and effective on the earliest of
(i) the date of  transmission,  if such notice or communication is delivered via
facsimile and the party giving such notice has a  confirmation  of  transmission
setting  forth  the date and time of  transmission,  which was  produced  by the
facsimile  machine at the facsimile  telephone  number specified in this Section
prior to 8:00  p.m.  (New  York  City  time),  (ii) the date  after  the date of

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transmission, if such notice or communication is delivered via facsimile and the
party giving such notice has a confirmation  of  transmission  setting forth the
date and time of  transmission,  which was produced by the facsimile  machine at
the facsimile  telephone  number  specified in this Section later than 8:00 p.m.
(New York City time) on any date and  earlier  than  11:59  p.m.  (New York City
time) on such  date,  (iii) upon  receipt,  if sent by a  nationally  recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

     Section 6. OPTIONAL REDEMPTION.

     (a)  Subject  to the  provisions  of this  Section  6,  from and  after the
Original  Issue Date,  the Company  shall have the right,  upon 30 Trading Days'
notice (an "OPTIONAL  REDEMPTION  NOTICE" and the date such Optional  Redemption
Notice is received by a Holder,  an "OPTIONAL  REDEMPTION DATE") to the Holders,
to redeem all or any  portion of the shares of  Preferred  Stock  which have not
previously  been  redeemed or for which  Conversion  Notices shall not have been
delivered,  for a price  equal to the  Optional  Redemption  Price  (as  defined
below). The Company may only deliver an Optional Redemption Notice if the number
of shares of Common Stock at the time  authorized,  unissued and  unreserved for
all purposes is sufficient to satisfy the Company's  conversion  obligations  of
all shares of Preferred Stock then outstanding, and this must be the case during
the  entire  30  Trading  Days  between  the  date of  delivery  of an  Optional
Redemption  Notice and the date of payment of the Optional  Redemption  Price. A
Holder may, subject to Section 5(a) hereof, convert (and the Company shall honor
such  conversions in accordance  with the terms hereof) any or all of the shares
of  Preferred  Stock  subject to an Optional  Redemption  Notice  delivered  for
conversion on or prior to the 30th Trading Day following an Optional  Redemption
Date.

     (b) Failure by the Company to pay the entire Optional  Redemption  Price by
the 30th Trading Day following an Optional  Redemption Date shall, at the option
of the Holders  subject  thereto,  result in the  invalidation  AB INITIO of the
unpaid portion of such optional redemption, and, notwithstanding anything herein
to the  contrary,  the  Company  shall  thereafter  have no  further  rights  to
optionally  redeem any shares of  Preferred  Stock.  In such event,  the Company
shall,  at the option of the Holder,  either,  (i) not later than three  Trading
Days from receipt of Holder's request therefor,  return to the Holder all of the
shares of Preferred Stock for which such Optional  Redemption Price has not been
paid in full (the "UNPAID REDEMPTION SHARES") or (ii) convert all or any portion
of the Unpaid  Redemption  Shares in which event the Per Share  Market Value for
such shares shall be the lowest of the  Conversion  Price,  the Per Share Market
Value  calculated on the date the Optional  Redemption  Price was originally due
and the Per Share Market Value as of the Holder's written demand for conversion.
If the Holder elects  option (ii) above,  the Company shall within three Trading
Days of its receipt of such election  deliver to the Holder the shares of Common
Stock issuable upon conversion of the Unpaid  Redemption  Shares subject to such
Holder conversion  demand and otherwise  perform its obligations  hereunder with
respect thereto.

     (c) The "OPTIONAL  REDEMPTION PRICE" applicable for any Optional Redemption
Date shall  equal the  product of (A) the sum of (x) one and (y) the  product of
0.0125 and the number of months after the Original  Issue Date that the Optional
Redemption Date occurs (rounding such number down in the event that the Optional
Redemption Date occurs before the 15th of any month, and rounding such number up
in the event that the  Optional  Redemption  Date occurs on or after the 15th of
any  month),  and (B) the  aggregate  Stated  Value of the  number  of shares of
Preferred Stock being redeemed.

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     Section 7. [INTENTIONALLY LEFT BLANK]

     Section 8. DEFINITIONS.  For the purposes hereof, the following terms shall
have the following meanings:

     "COMMON STOCK" means the Company's Class A common stock, par value $.01 per
share,  and stock of any other class into which such shares may  hereafter  have
been reclassified or changed.

     "CONVERSION  RATIO" means, at any time, a fraction,  the numerator of which
is Stated Value and the  denominator  of which is the  Conversion  Price at such
time.

     "JUNIOR  SECURITIES" means the Common Stock and all other equity securities
of the Company other than those  securities that are outstanding on the Original
Issue Date and which are explicitly  senior in rights or liquidation  preference
to the Preferred Stock.

     "ORIGINAL  ISSUE  DATE"  shall mean the date of the first  issuance  of any
shares of the  Preferred  Stock  regardless  of the number of  transfers  of any
particular   shares  of  Preferred   Stock  and  regardless  of  the  number  of
certificates  which may be issued to evidence such Preferred  Stock,  i.e. March
30, 2001.

     "PER SHARE MARKET VALUE" means on any  particular  date (a) the closing bid
price per share of Common Stock on such date on the Nasdaq  National or SmallCap
Market or on any other  market or  exchange  on which the  Common  Stock is then
listed or quoted  ("SUBSEQUENT  MARKET"),  or if there is no such  price on such
date, then the closing bid price on the Nasdaq National or SmallCap Market or on
such  Subsequent  Market on the date nearest  preceding such date, or (b) if the
Common  Stock is not then  listed or quoted on the Nasdaq  National  or SmallCap
Market or on a Subsequent  Market,  the closing bid price for a shares of Common
Stock in the  over-the-counter  market,  as reported by the  National  Quotation
Bureau  Incorporated  or  similar  organization  or  agency  succeeding  to  its
functions of reporting  prices) at the close of business on such date, or (c) if
the  Common  Stock  is not  then  reported  by  the  National  Quotation  Bureau
Incorporated (or similar  organization or agency  succeeding to its functions of
reporting prices),  then the average of the "Pink Sheet" quotes for the relevant
conversion  period,  as  determined  in good faith by the Holder,  or (d) if the
Common  Stock are not then  publicly  traded the fair market value of a share of
Common Stock as determined by an appraiser selected in good faith by the Holders
of a majority of the shares of the Preferred Stock.

     "PERSON" means a corporation, an association, a partnership,  organization,
a business,  an individual,  a government or political  subdivision thereof or a
governmental agency.

     "TRADING  DAY" means (a) a day on which the  Common  Stock is traded on the
Nasdaq  National or  SmallCap  Market or on the  Subsequent  Market on which the
Common Stock is then listed or quoted,  as the case may be, or (b) if the Common

                                       8
<PAGE>
Stock is not listed on the Nasdaq National or SmallCap Market or on a Subsequent
Market,  a day on which  the  Common  Stock is  traded  in the  over-the-counter
market, as reported by the OTC Bulletin Board, or (c) if the Common Stock is not
quoted on the OTC Bulletin  Board,  a day on which the Common Stock is quoted in
the  over-the-counter  market  as  reported  by the  National  Quotation  Bureau
Incorporated (or any similar  organization or agency succeeding its functions of
reporting prices); PROVIDED, HOWEVER, that in the event that the Common Stock is
not listed or quoted as set forth in (a),  (b) and (c) hereof,  then Trading Day
shall mean any day except  Saturday,  Sunday and any day which  shall be a legal
holiday  or a day on which  banking  institutions  in the  State of New York are
authorized or required by law or other government action to close.

     "UNDERLYING  SHARES" means the shares of Common Stock into which the shares
of Preferred Stock are convertible in accordance with the terms hereof.

                                       9
<PAGE>
                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)

The  undersigned  hereby  elects to convert  the number of shares of Series E 8%
Convertible  Preferred  Stock  indicated  below,  into  shares of Class A common
stock,  par value $.01 per share (the "COMMON STOCK"),  of Global  Technologies,
Ltd.,  a Delaware  corporation  (the  "COMPANY"),  according  to the  conditions
hereof,  as of the date written below. If shares are to be issued in the name of
a person other than  undersigned,  the  undersigned  will pay all transfer taxes
payable with respect thereto and is delivering  herewith such  certificates  and
opinions as reasonably requested by the Company in accordance therewith.  No fee
will be  charged  to the Holder  for any  conversion,  except for such  transfer
taxes, if any.

Conversion calculations:

                       _________________________________________________________
                       Date to Effect Conversion

                       _________________________________________________________
                       Number of shares of Preferred Stock to be Converted

                       _________________________________________________________
                       Stated Value of shares of Preferred Stock to be Converted

                       _________________________________________________________
                       Number of shares of Common Stock to be Issued

                       _________________________________________________________
                       Applicable Conversion Price

                       _________________________________________________________
                       Signature

                       _________________________________________________________
                       Name

                       _________________________________________________________
                       Address<PAGE>

                                  EXHIBIT 4.11

                      OFFICERS' CERTIFICATE PURSUANT TO THE
                           INDENTURE IDENTIFIED BELOW

      The undersigned William R. Hollinger, Senior Vice President and Controller
of KB HOME, a Delaware corporation (the "Issuer"), and Kimberly N. King,
Corporate Secretary and Director, Corporate Legal Affairs of the Issuer:

            (a) Each hereby certifies that he or she has read and is familiar
      with the provisions of Article Two of the Indenture referred to below
      relating to the issuance of Securities thereunder; that he or she is
      generally familiar with the other provisions of the Indenture and with the
      affairs of the Issuer and its corporate acts and proceedings; that, in his
      or her opinion, he or she has made such examination or investigation as is
      necessary to enable him or her to express an informed opinion as to
      whether or not the covenants and conditions have been complied with and
      that all covenants or conditions provided for in the Indenture relating to
      the establishment of a series of Securities and the form and terms of such
      series and the issuance, authentication and delivery of such Securities
      have been complied with.

            (b) Acting pursuant to Article Two of the Indenture referred to
      below, do hereby authorize, adopt and approve the following terms for a
      series of Securities to be issued under the Senior Subordinated Debt
      Indenture dated as of November 19, 1996 (the "Indenture", which term, as
      used herein, includes the form and terms of the Notes established by this
      Officers' Certificate), between the Issuer and SunTrust Bank, as successor
      to SunTrust Bank, Atlanta, as Trustee:

      (1)   Designation of Securities of the series:

            8-5/8% Senior Subordinated Notes due 2008.

      (2) Limit on the aggregate principal amount of Notes (except for Notes
authenticated and delivered upon registration of transfer, or in exchange for,
or in lieu of, other Notes pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of
the Indenture or Section 10 of this Officers' Certificate or pursuant to any
provision of the Indenture providing for redemption, repayment or repurchase of
Notes in whole or in part):

            $200,000,000 aggregate principal amount are to be authenticated and
      delivered upon original issuance on the Closing Date and, subject to the
      covenants applicable to the Notes set forth in the Indenture (including
      the covenants set forth in this Officers' Certificate) and applicable law,
      an additional unlimited aggregate principal amount of Notes may be
      authenticated and delivered upon original issuance, at any time and from
      time to time after the Closing Date, upon the delivery to the Trustee of
      an Issuer Order, accompanied by a Board Resolution; provided that any
      Additional Notes issued after the Closing Date shall have the same form
      and terms (other than date of issuance and the date from which interest
      thereon shall begin to accrue), and carry the same right to receive
      accrued and unpaid interest, as the Notes originally issued on the Closing
      Date; and
<PAGE>
      provided, further, that, notwithstanding the foregoing, no Additional
      Notes may be issued if the Issuer has effected satisfaction and discharge
      of the Indenture with respect to the Notes pursuant to Section 10.1(A) of
      the Indenture or has effected defeasance of the Notes pursuant to Section
      10.1(B) of the Indenture or has effected covenant defeasance of the Notes
      pursuant to Section 10.1(C) of the Indenture. All of the Notes issued on
      the Closing Date, together with any Additional Notes which may be
      originally issued after the Closing Date, shall constitute one series of
      Securities under the Indenture.

      (3)   Date on which the principal of Notes is payable at maturity:

            December 15, 2008.

      (4)   Interest on the Notes:

            (a)   The rate of interest on the Notes and the method of
      calculation thereof:

                  8-5/8% per annum calculated on the basis of a 360-day year
                  of twelve 30-day months.

            (b)   The date from which such interest shall accrue:

                  December 14, 2001.

            (c)   Interest payment dates:

                  June 15 and December 15, commencing June 15, 2002.

            (d)   Record dates:

                  June 1 and December 1 (in each case whether or not a Business
                  Day), as the case may be, next preceding each June 15 and
                  December 15, respectively.

      (5)   Place or places where Notes shall be payable:

            The principal of and interest on the Notes shall be payable, and the
      Notes may be presented for registration of transfer and exchange, in the
      Borough of Manhattan, The City of New York at an office or agency
      maintained by the Issuer for such purpose pursuant to Section 3.2 of the
      Indenture. Such office or agency shall initially be the agent of the
      Trustee in The City of New York, which on the date hereof is Computershare
      Trust Company of New York, Wall Street Plaza, 88 Pine Street, 19th Floor,
      New York, New York 10005. In addition, so long as the Trustee shall act as
      trustee with respect to the Notes, the principal of and interest on the
      Notes shall be payable, and the Notes may be presented for registration of
      transfer and exchange, at the office of the Trustee in Atlanta, Georgia
      designated for such purpose.

      (6)   Redemption of Notes at the option of the Issuer; absence of
sinking fund:

                                       2
<PAGE>

            Except as set forth in Section 12 below, the Notes will not be
      redeemable at the Issuer's option. The Notes will not be entitled to the
      benefit of any sinking fund.

      (7)   Repurchase of Notes at option of the Holders upon Change of
Control:

            (a) If at any time there occurs a Change of Control with respect to
      the Issuer, each Holder of Notes will have the right, at such Holder's
      option, to require the Issuer to repurchase all of such Holder's Notes, or
      a portion thereof which is in a principal amount of $1,000 or any integral
      multiple thereof, on the date (the "Change of Control Repurchase Date")
      that is 30 Change of Control Business Days after the date of the Change of
      Control at a price equal to 101% of the principal amount thereof, plus
      accrued and unpaid interest to the Change of Control Repurchase Date (the
      "Change of Control Repurchase Price").

            (b) Within 15 Change of Control Business Days after the occurrence
      of a Change of Control, the Issuer or, at the request of the Issuer, the
      Trustee will give notice (the "Change of Control Notice"), in the manner
      provided in Section 11.4 of the Indenture, to all Holders of the Notes of
      the occurrence of such Change of Control and of the Issuer's offer to
      repurchase Notes pursuant to the repurchase right arising as a result
      thereof and will cause a copy of such notice to be published in an
      Authorized Newspaper in The City of New York. If such Change of Control
      Notice is given by the Issuer, the Issuer shall also deliver a copy
      thereof to the Trustee. Such Change of Control Notice shall contain all
      instructions and (except in the case of the published notice) materials
      necessary to enable Holders of Notes to surrender their Notes to the
      Issuer for repurchase (including (except in the case of the published
      notice), without limitation, a form of Change of Control Repurchase Notice
      (as defined below)) and, without limitation to the foregoing, shall state:

                  (i) that the Issuer is offering to repurchase all of the Notes
            as a result of a Change of Control pursuant to this Section 7, and
            shall state the events causing such Change of Control and the date
            of such Change of Control;

                  (ii)  the Change of Control Repurchase Date;

                  (iii) the Change of Control Repurchase Price;

                  (iv) that a Holder electing to have a Note (or any portion
            thereof which is a principal amount of $1,000 or any integral
            multiple thereof) repurchased will be required to surrender the
            Note, duly endorsed by, or accompanied by a written instrument or
            instruments of transfer executed by, the Holder or his attorney duly
            authorized in writing, together with a duly completed Change of
            Control Repurchase Notice, at an address specified in subparagraph
            (v) below prior to the Change of Control Repurchase Date (such
            notice shall specify the information which the Holder must set forth
            in such Change of Control Repurchase Notice, and shall indicate that
            copies of the form of Change of Control Repurchase Notice are
            available at the office of the Trustee and at each other office or
            agency specified in subparagraph (v) below);

                                       3
<PAGE>
                  (v) the address of the Trustee where Notes may be surrendered
            for repurchase pursuant to such Change of Control, and the name and
            address of each other office or agency where Notes may be
            surrendered for repurchase pursuant to such Change of Control, which
            shall include the office or agency in the Borough of Manhattan, The
            City of New York maintained with respect to the Notes pursuant to
            Section 3.2 of the Indenture;

                  (vi) that the Change of Control Repurchase Price for any Note
            which has been duly surrendered, together with a duly completed
            Change of Control Repurchase Notice, and not withdrawn will be paid
            on the Change of Control Repurchase Date;

                  (vii) that any Note repurchased by the Issuer on the Change of
            Control Repurchase Date shall cease to accrue interest on the Change
            of Control Repurchase Date unless the Issuer defaults in making
            payment in full of the Change of Control Repurchase Price, and that
            any Note which is not surrendered for repurchase or which is
            surrendered and thereafter withdrawn shall continue to accrue
            interest;

                  (viii) that Holders who have surrendered Notes for repurchase
            will be entitled to withdraw such Notes (or any portion thereof in a
            principal amount of $1,000 or any integral multiple thereof) if the
            Trustee or any office or agency referred to in clause (v) above, as
            the case may be, receives, prior to the Change of Control Repurchase
            Date, a telegram, telex, facsimile transmission, letter or hand
            delivery notice setting forth the name of the Holder, the
            certificate number and the principal amount of the Note (which may
            be all or a portion of such principal amount which is $1,000 or an
            integral multiple thereof) with respect to which such notice of
            withdrawal is being submitted and the principal amount, if any, of
            the Note which is not being withdrawn;

                  (ix) that Holders whose Notes are repurchased only in part
            will be issued new Notes equal in principal amount to the
            unrepurchased portion of the Notes surrendered, and that Holders
            surrendering Notes for repurchase in part may specify the
            denomination or denominations (which must be $1,000 or an integral
            multiple of $1,000) of the Note or Notes to be issued for the
            unrepurchased portion of the Notes being surrendered and that, in
            the absence of any such specification, one Note will be issued for
            the portion not repurchased; and

                  (x) any other procedures the Holder must follow to exercise
            its rights under this Section 7.

            (c) "Change of Control Repurchase Notice" means a written notice
      (which may be the form thereof provided by the Issuer pursuant to Section
      7(b) or any other written notice which sets forth the information
      described below), signed by the Holder or his attorney duly authorized in
      writing, stating:

                                       4
<PAGE>
                  (i)   the name and address of the Holder and the
            certificate number of the Note which the Holder is delivering to
            be repurchased;

                  (ii) if the Note is surrendered for repurchase in part, the
            portion of the principal amount of the Note which the Holder is
            delivering to be repurchased, which portion must be $1,000 or an
            integral multiple thereof;

                  (iii) if the Note is surrendered for repurchase in part, the
            denomination or denominations (which must be $1,000 or any integral
            multiple thereof) of the Note or Notes to be issued to the Holder
            for the unrepurchased portion of the Note being surrendered,
            provided that the failure so to specify such denomination or
            denominations shall not constitute a defect in the Change of Control
            Repurchase Notice and, in such event, one Note will be issued for
            such unrepurchased portion of the Note being surrendered; and

                  (iv) that such Holder is electing to have such Note (or
            portion thereof) repurchased by the Issuer on the Change of Control
            Repurchase Date.

            The delivery of a Note, by hand, by mail or otherwise, prior to the
      Change of Control Repurchase Date to the Trustee or to an office or agency
      referred to in Section 7(b)(v) above shall be a condition to the receipt
      by the Holder of the Change of Control Repurchase Price therefor.

            (d) Anything in this Officers' Certificate or the Indenture to the
      contrary notwithstanding, in the case of any Notes in book-entry form
      represented by one or more Global Notes (as defined in Section 15(a) of
      this Officers' Certificate) registered in the name of a Depositary or its
      nominee, the surrender and withdrawal of such Notes in connection with a
      Change of Control may be effected by book-entry transfer in accordance
      with the Depositary's procedures as in effect from time to time and the
      Change of Control Repurchase Notice, any notice of withdrawal or any other
      notice contemplated by Section 7, 8, 9 or 10 of this Officers' Certificate
      with respect to such Notes may be given electronically or otherwise in
      accordance with the procedures of the Depositary as in effect from time to
      time.

      (8)   Effect of Change of Control Repurchase Notice; Right of
Withdrawal:

            Upon surrender by a Holder of a Note for repurchase pursuant to
      Section 7, together with a duly completed Change of Control Repurchase
      Notice, such Holder shall (unless such Note is withdrawn as specified in
      the following paragraph) thereafter be entitled to receive, on the Change
      of Control Repurchase Date, the Change of Control Repurchase Price with
      respect to such Note. On the Change of Control Repurchase Date, the Issuer
      will pay or cause the Trustee or a paying agent to pay the Holders of
      Notes which have been duly surrendered for repurchase and not withdrawn
      the Change of Control Repurchase Price for such Notes.

            A Holder who has surrendered a Note for repurchase on a Change of
      Control Repurchase Date will be entitled to withdraw such Note (or any
      portion thereof in a principal amount of $1,000 or any integral multiple
      thereof) if the Trustee or any office or

                                       5
<PAGE>
      agency referred to in Section 7(b)(v) receives, prior to the Change of
      Control Repurchase Date, a telegram, telex, facsimile transmission, letter
      or hand delivery notice setting forth the information specified in Section
      7(b)(viii).

            If any Note is withdrawn in whole, the Issuer shall cause such Note
      promptly to be mailed or otherwise delivered to the Holder thereof.

            If any Note surrendered for repurchase shall not be so paid in full
      on the relevant Change of Control Repurchase Date, the principal thereof
      (including the premium thereon) shall, until paid, bear interest from such
      Change of Control Repurchase Date at the rate of interest borne by the
      Notes, and the Issuer shall cause such Note promptly to be mailed or
      otherwise delivered to the Holder thereof.

            The Issuer shall publicly announce the results of an offer made
      following a Change of Control on or promptly after the Change of Control
      Repurchase Date.

      (9)   Deposit of Change of Control Repurchase Price:

            On or prior to the Change of Control Repurchase Date, the Issuer
      shall deposit with the Trustee or with a paying agent for the Notes (or,
      if the Issuer is acting as its own paying agent, shall set aside,
      segregate and hold in trust as provided in Section 3.4 of the Indenture)
      an amount of cash sufficient to pay the aggregate Change of Control
      Repurchase Price for all Notes or portions thereof which have been duly
      surrendered for repurchase and not withdrawn.

            Anything in this Officers' Certificate, the Notes or the Indenture
      to the contrary notwithstanding, interest payable on Notes duly
      surrendered for repurchase on a Change of Control Repurchase Date shall be
      paid with and in the same manner as the principal of such Notes payable on
      such Change of Control Repurchase Date.

      (10)  Notes repurchased in part:

            In the case of any Note which is repurchased only in part, the
      Issuer shall execute and the Trustee shall authenticate and deliver to the
      Holder of such Note, without service charge, a new Note or Notes, of any
      authorized denominations as specified by such Holder (or, if the Holder
      shall fail to specify any such denominations, a single Note in an
      authorized denomination), in aggregate principal amount equal to, and in
      exchange for, the portion of the principal amount of the Note so
      surrendered which is not repurchased.

            Provisions of this Indenture that apply to the repurchase of all of
      a Note pursuant to Section 7 also apply to the repurchase of a portion of
      such Note.

      (11)  Covenant to comply with securities laws upon repurchase of Notes:

            In connection with any offer to purchase Notes under Section 7, the
      Issuer will conduct such offer in compliance with applicable securities
      laws and regulations, including Section 14(e) of the Exchange Act and Rule
      14e-1 thereunder, to the extent applicable.

                                       6
<PAGE>
      (12) Redemption of the Notes at the option of the Issuer with Net Cash
Proceeds of Equity Offerings.

            At any time prior to December 15, 2004, the Issuer at its option may
      redeem Notes in an aggregate principal amount equal to up to 35% of the
      original aggregate principal amount of the Notes (including any Additional
      Notes) with the Net Cash Proceeds of one or more Equity Offerings, at any
      time or from time to time, at a redemption price equal to 108.625% of the
      principal amount plus accrued interest to the date fixed for redemption
      (provided that payments of interest becoming due on or prior to a date
      fixed for redemption of the Notes will be payable to the Holders of the
      Notes registered as such at the close of business on the relevant record
      dates subject to the terms and provisions of the Indenture); provided that
      Notes (including any Additional Notes) with an aggregate principal amount
      equal to at least $130,000,000 remain outstanding after each such
      redemption; and provided, further, that notice of any such redemption is
      mailed within 60 days after the closing date of the applicable Equity
      Offering and, in any event, not less than 30 nor more than 60 days prior
      to the applicable redemption date, all in accordance with the requirements
      of the Indenture.

      (13) Denominations in which Notes are issuable, if other than $1,000 and
any integral multiples thereof:

      Not Applicable.

      (14) If other than the principal amount thereof, the portion of the
principal amount of Notes payable on declaration of acceleration:

      Not Applicable.

      (15) Whether Notes are issuable as Registered Securities, Unregistered
Securities (with or without interest coupons), or any combination thereof:

            (a) The Notes will be issued as Registered Securities without
      Coupons. The Notes will initially be issued in book-entry form and
      represented by one or more Registered Global Securities (the "Global
      Notes"). The initial Depositary for the Global Notes will be The
      Depository Trust Company, New York, New York ("DTC"). The Global Notes
      will initially be deposited with, or on behalf of DTC and registered in
      the name of Cede & Co., the nominee of DTC. Unless and until it is
      exchanged for individual certificates evidencing Notes, as provided below,
      a Global Note may not be transferred except as a whole by the Depositary
      to its nominee or by a nominee to the Depositary or another nominee of the
      Depositary, or by the Depositary or its nominee to a successor Depositary
      or to a nominee of the successor Depositary.

            (b) In addition to the events specified in Section 2.8 of the
      Indenture under which one or more Notes in definitive form will be issued
      in exchange for Global Notes, if at any time an Event of Default under the
      Indenture has occurred and is continuing with respect to the Notes, then
      the Issuer will execute, and the Trustee, upon receipt of an Officers'
      Certificate for the authentication and delivery of Notes in definitive
      registered form, will authenticate and deliver, Notes in definitive
      registered form, in any authorized

                                       7
<PAGE>
      denominations, in an aggregate principal amount equal to the principal
      amount of the Global Notes, in exchange for such Global Notes. Any Note in
      definitive form issued in exchange for a beneficial interest in a Global
      Note will be registered in such name or names as the Depositary shall
      instruct the Trustee. The Depositary may surrender Global Notes in
      exchange in whole or in part for Notes in definitive registered form on
      such terms as are acceptable to the Issuer and the Depositary.

      (16)  Any other terms of Notes:

      The Issuer covenants and agrees for the benefit of the Holders of the
Notes as follows:

            (a)   Limitation on Incurrence of Additional Indebtedness

            The Issuer will not, and will not permit any of its Restricted
      Subsidiaries to, directly or indirectly, create, incur, issue, assume,
      guarantee, extend the maturity of or in any other manner become liable
      with respect to, or otherwise become responsible for the payment of
      (collectively, "incur"), any Indebtedness unless after giving effect to
      the incurrence thereof and the receipt and application of the net proceeds
      therefrom either:

                  (1) the Consolidated Fixed Charge Coverage Ratio of the Issuer
            (determined on a pro forma basis for the last four fiscal quarters
            of the Issuer for which financial statements are available at the
            date of determination) is at least 2.0 to 1 or

                  (2) the ratio of Indebtedness of the Issuer and its Restricted
            Subsidiaries to Consolidated Net Worth of the Issuer is less than
            3.5 to 1.

            Notwithstanding the foregoing, the Issuer and its Restricted
      Subsidiaries may incur:

                  (1)   Refinancing Indebtedness;

                  (2) Non-Recourse Indebtedness incurred for the acquisition or
            improvement of real property and secured by mortgage Liens on such
            real property or improvements;

                  (3)   Indebtedness to the Issuer or to Restricted
            Subsidiaries;

                  (4) Indebtedness under the 2000 Revolving Credit Facility
            included in the Existing Credit Facilities in an aggregate principal
            amount at any one time of not more than $739,100,000; and

                  (5)   Excluded Debt.

            (b)   Limitation on Restrictions on Distributions from Restricted
      Domestic Subsidiaries

                                       8
<PAGE>

            The Issuer will not, and will not permit any of its Restricted
      Domestic Subsidiaries to, directly or indirectly, create, assume or
      otherwise cause or permit to exist or to become effective any consensual
      encumbrance or restriction on the ability of any Restricted Domestic
      Subsidiary to:

                  (1) pay dividends or make any other distributions on its
            Capital Stock or on any other interest or participation in, or
            measured by, its profits, owned by the Issuer or any of its other
            Restricted Subsidiaries, or pay interest on or principal of any
            Indebtedness owed to the Issuer or any of its other Restricted
            Subsidiaries;

                  (2)   make loans or advances to the Issuer or any of its
            other Restricted Subsidiaries; or

                  (3)   transfer any of its properties or assets to the
            Issuer or any of its other Restricted Subsidiaries,

      except for (i) encumbrances or restrictions on the payment of cash by any
      Restricted Domestic Subsidiary which do not exceed $10,000 in the
      aggregate and (ii) encumbrances or restrictions existing or created under
      or by reason of:

                        (a)   applicable law;

                        (b)   covenants or restrictions contained in Existing
                  Indebtedness;

                        (c) customary provisions restricting subletting or
                  assignment of any contract or of any lease governing a
                  leasehold interest of the Issuer or any Restricted Domestic
                  Subsidiary;

                        (d) restrictions under any instrument creating or
                  evidencing any Acquired Indebtedness that was permitted to be
                  incurred pursuant to the Indenture and the Notes and which (I)
                  only apply to assets that were subject to such restrictions
                  and encumbrances prior to the acquisition of such assets by
                  the Issuer or its Restricted Domestic Subsidiaries and (II)
                  were not created in connection with, or in contemplation of,
                  such acquisition;

                        (e) restrictions replacing those permitted by clause (b)
                  or (d) which are not more restrictive than, and do not extend
                  to any Persons or assets other than the Persons or assets
                  subject to, the restrictions and encumbrances so replaced;

                        (f) restrictions under any instrument creating or
                  evidencing any Refinancing Indebtedness which are not more
                  restrictive than those under, and do not extend to any Persons
                  or assets other than the Persons or assets subject thereto
                  under, the instrument creating or evidencing the

                                       9
<PAGE>
                  Indebtedness being refunded, extended or refinanced by such
                  Refinancing Indebtedness;

                        (g) any Permitted Lien or any agreement restricting the
                  sale or other disposition of property securing Indebtedness
                  permitted by the Indenture and the Notes if such Permitted
                  Lien or agreement, as the case may be, does not by its terms
                  expressly restrict the ability of a Restricted Domestic
                  Subsidiary of the Issuer to make any of the dividends,
                  payments, distributions, loans, advances or transfers referred
                  to in clauses (1), (2) or (3) above;

                        (h) reasonable and customary borrowing base covenants
                  set forth in credit agreements evidencing Indebtedness
                  otherwise permitted by the Indenture and the Notes, 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;

                        (i) customary agreements entered into in the ordinary
                  course of business restricting the ability of the joint
                  venture to make distributions or payments of cash or property
                  to participants in such joint venture; or

                        (j) the Existing Credit Facilities or a Substitute
                  Credit Facility but only so long as no such encumbrance or
                  restriction under the Existing Credit Facilities or a
                  Substitute Credit Facility by its terms expressly restricts
                  the ability of a Restricted Domestic Subsidiary of the Issuer
                  to make any of the dividends, payments, distributions, loans,
                  advances or transfers referred to in clauses (1), (2) or (3)
                  above (it being understood that covenants requiring or having
                  the effect of requiring the maintenance of a specified level
                  of net worth which do not by their terms expressly restrict
                  the ability of a Restricted Domestic Subsidiary of the Issuer
                  to make any such dividends, payments, distributions, loans,
                  advances or transfers referred to in clauses (1), (2) or (3)
                  above shall be permitted under this clause (j)).

            (c)   Limitation on Restricted Payments

            The Issuer will not, and will not permit any of its Restricted
      Subsidiaries to, directly or indirectly, make any Restricted Payment if,
      after giving effect thereto,

                  (1)   a Default or an Event of Default shall have occurred
            and be continuing; or

                  (2) the aggregate amount of Restricted Payments (the amount of
            any Restricted Payment, if other than in cash, to be determined by
            the Board of Directors of the Issuer, whose reasonable determination
            shall be conclusive and evidenced by a Board Resolution certified by
            an Officers' Certificate and filed

                                       10
<PAGE>
            with the Trustee) made by the Issuer and its Restricted Subsidiaries
            from and after the date of the Indenture would exceed the sum of (a)
            50% of the Consolidated Net Income of the Issuer accrued on a
            cumulative basis for the period commencing on September 1, 1996 (the
            "Commencement Date") and ending on the last day (the "Reference
            Day") of the Issuer's last fiscal quarter ending prior to the date
            of such proposed Restricted Payment (or, in the event such
            Consolidated Net Income as so determined on a cumulative basis shall
            be a deficit, minus 100% of such deficit), (b) the aggregate net
            proceeds, including the fair market value of property other than
            cash (such fair market value to be determined by a majority of the
            disinterested members of the full Board of Directors of the Issuer,
            whose reasonable determination shall be conclusive and evidenced by
            a Board Resolution certified by an Officers' Certificate and filed
            with the Trustee), received by the Issuer from any Person (other
            than a Restricted Subsidiary) after the Commencement Date and on or
            prior to the Reference Date from the issue or sale of Qualified
            Capital Stock of the Issuer, or any options, warrants or other
            rights (other than convertible or exchangeable debt securities
            except as provided below) to purchase Qualified Capital Stock of the
            Issuer, or from the issuance or sale of debt securities of the
            Issuer which are converted into or exchanged for Qualified Capital
            Stock of the Issuer, and (c) $100,000,000; or

                  (3) the Issuer would be unable to incur an additional $1.00 of
            Indebtedness pursuant to the first paragraph of the covenant set
            forth in Section 16(a) of this Officers' Certificate;

      provided, however, that the foregoing provisions shall not prevent (a) the
      payment of any dividend or distribution within 60 days after the date of
      declaration thereof, if the payment would have complied with the foregoing
      provisions on the date of such declaration or (b) the repurchase or
      redemption of shares of Capital Stock from any officer, director or
      employee of the Issuer or its Restricted Subsidiaries whose employment has
      been terminated or who has died or become disabled in an aggregate amount
      not to exceed $5,000,000 for any fiscal year of the Issuer; provided that
      amounts paid pursuant to this clause (b) shall reduce amounts available
      for future Restricted Payments.

            (d)   Limitations on Transactions with Officers, Directors and
      Employees

            The Issuer will not, and will not permit any of its Restricted
      Subsidiaries to, directly or indirectly,

                  (1)   make any loan, advance, guarantee or capital
            contribution to, or for the benefit of, or

                  (2)   sell, lease, transfer or otherwise dispose of any of
            its properties or assets to, or for the benefit of, or

                  (3)   purchase or lease any property or assets from, or

                                       11
<PAGE>

                  (4)   enter into or amend any contract, agreement or
            understanding with, or for the benefit of,

                        (a)   any officer, director or employee of the Issuer,

                        (b) any officer, director or employee of a Subsidiary of
                  the Issuer (provided that clause (4) above shall not apply
                  with respect to this clause (b)) or

                        (c) any former officer or director of the Issuer or any
                  of its Subsidiaries who owns, directly or indirectly, 7.5% or
                  more of the voting power of the Common Stock of the Issuer

      (each an "Affiliate Transaction"), except on terms that are no less
      favorable to the Issuer or the relevant Restricted 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 such an
      officer, director or employee.

            Notwithstanding the foregoing, the term "Affiliate Transaction"
      shall not include any transaction with an officer, director or employee of
      the Issuer or of any Subsidiary of the Issuer in their capacity as
      officer, director or employee entered into in the ordinary course of
      business or which is consistent with past practice (including compensation
      and employee benefit arrangements with any officer, director or employee
      of the Issuer or of any Subsidiary of the Issuer) and shall not include
      the acquisition by any officer, director or employee of the Issuer of any
      securities of the Issuer in the open market in arm's length transactions.

            (e)   Limitation on Investments in Restricted Foreign
      Subsidiaries, Unrestricted Subsidiaries and Equity Method Persons

            The Issuer will not, and will not permit any of its Restricted
      Domestic Subsidiaries to, directly or indirectly, make any Investment in
      any Restricted Foreign Subsidiary, Unrestricted Subsidiary or Equity
      Method Person (each, a "Subject Entity") if, after giving effect thereto,
      the aggregate amount of all such Investments made after the date of the
      Indenture would exceed the sum of:

                  (1)   $110,000,000,

                  (2) the aggregate amount of cash dividends and distributions
            received by the Issuer after the date of the Indenture from Subject
            Entities,

                  (3) in the case of any such Investment made after the date of
            the Indenture as a loan or advance to, or purchase (or other
            acquisition for consideration) of Indebtedness or other debt
            securities of, a Subject Entity, the amount of all cash repayments
            of principal of such loans, advances, Indebtedness or debt
            securities paid to the Issuer or any of its Restricted Domestic
            Subsidiaries (or to a Person designated by the Issuer or any of its
            Restricted Domestic

                                       12
<PAGE>
            Subsidiaries, which Person is not a Subsidiary or Affiliate of the
            Issuer) by such Subject Entity,

                  (4) in the case of any such Investment made after the date of
            the Indenture as a capital contribution to, or purchase (or other
            acquisition for consideration) of Capital Stock or other equity
            securities of, a Subject Entity, the aggregate cash amount paid to
            the Issuer or any of its Restricted Domestic Subsidiaries (or to a
            Person designated by the Issuer or any of its Restricted Domestic
            Subsidiaries, which Person is not a Subsidiary or Affiliate of the
            Issuer) by such Subject Entity as a return of such capital or to
            repurchase such Capital Stock or other equity securities (not to
            exceed the respective amount paid to purchase such Capital Stock or
            equity securities), and

                  (5) in the case of any other such Investment made in a Subject
            Entity after the date of the Indenture, the cash amount paid to the
            Issuer or any of its Restricted Domestic Subsidiaries (or to a
            Person designated by the Issuer or any of its Restricted Domestic
            Subsidiaries, which Person is not a Subsidiary or Affiliate of the
            Issuer) by such Subject Entity as a repayment or reimbursement of
            such Investment.

            (f)   Corporate Existence

            Subject to Article Nine of the Indenture (as modified by Section
      24(h) of this Officers' Certificate), the Issuer will do or cause to be
      done all things necessary to preserve and keep in full force and effect
      its corporate existence and its rights (charter and statutory) and
      franchises; provided, however, that the Issuer shall not be required to
      preserve any such right or franchise if the Board of Directors shall
      determine that the preservation thereof is no longer desirable in the
      conduct of the business of the Issuer and its Subsidiaries taken as a
      whole.

            (g)   Payment of Taxes

            The Issuer will pay or discharge or cause to be paid or discharged,
      before the same shall become delinquent, all taxes, assessments and
      governmental charges levied or imposed upon the Issuer or any Restricted
      Significant Subsidiary or upon the income, profits or property of the
      Issuer or any Restricted Significant Subsidiary; provided that the Issuer
      shall not be required to pay or discharge or cause to be paid or
      discharged any such tax, assessment or charge whose amount, applicability
      or validity is being contested in good faith by appropriate proceedings;
      provided, further, that the Issuer shall not be required to pay or cause
      to be paid (i) any such delinquent taxes, assessments or charges until the
      aggregate amount thereof at any time outstanding shall exceed $10,000,000
      or (ii) any such tax, assessment or charge levied on any property of the
      Issuer or any Restricted Significant Subsidiary that is without recourse
      to the Issuer or any Restricted Significant Subsidiary.

            (h)   Waiver of Stay, Extension or Usury Laws

                                       13
<PAGE>

            The Issuer covenants (to the extent that it may lawfully do so) that
      it will not at any time insist upon, plead, or in any manner whatsoever
      claim or take the benefit or advantage of, any stay or extension law or
      any usury law or other law which would prohibit or forgive the Issuer from
      paying all or any portion of the principal of or interest on the Notes as
      contemplated herein and in the Indenture, wherever enacted, now or at any
      time hereafter in force, or which may affect the covenants or the
      performance of this Officers' Certificate or the Indenture and (to the
      extent that it may lawfully do so) the Issuer hereby expressly waives all
      benefit or advantage of any such law and covenants that it will not
      hinder, delay or impede the execution of any power granted to the Trustee,
      but will suffer and permit the execution of every such power as though no
      such law had been enacted.

      (17)  Initial public offering price of Notes:

      The Issuer will sell the Notes to underwriters for 99.206% of the
principal amount thereof. Such underwriters propose to offer the Notes from time
to time for sale in one or more negotiated transactions, or otherwise, at
varying prices to be determined at the time of sale.

      (18)  Underwriting discount as a percentage of the principal amount of
Notes:

      Not applicable.

      (19) If other than Dollars, the coin or currency in which payment of
principal of and interest on the Notes shall be payable and in which the Notes
shall be denominated.

      Not applicable.

      (20)  Terms defined for purposes of this Officers' Certificate and the
issuance of the Notes:

      All references in the Indenture to the Secretary of the Issuer shall be
deemed to include a reference to the Corporate Secretary of the Issuer.

      "2000 Revolving Credit Facility" means the 2000 Revolving Loan Agreement,
dated as of October 3, 2000, among the Issuer, the banks party thereto, Bank of
America, N.A., as administrative agent, Credit Lyonnais Los Angeles Branch, as
syndication agent, Bank One, NA, as documentation agent, and Banc of America
Securities LLC, as lead arranger and sole book manager, and any credit facility
which is an extension, renewal or replacement thereof.

      "Acquired Indebtedness" means:

            (1) with respect to any Person (except a Person formed or organized
      by or on behalf of the Issuer for purposes other than to act as an
      acquisition vehicle) that becomes a Subsidiary of the Issuer after the
      date of the Indenture, Indebtedness of such Person and its Subsidiaries
      existing at the time such Person becomes a Subsidiary of the Issuer that
      was not incurred in connection with, or in contemplation of, such Person
      becoming a Subsidiary of the Issuer,

                                       14
<PAGE>

            (2) with respect to the Issuer or any of its Subsidiaries, any
      Indebtedness incurred by the Issuer or any of its Subsidiaries in
      connection with the acquisition of an asset from another Person after the
      date of the Indenture that was not incurred in connection with, or in
      contemplation of, such acquisition.

      "Additional Notes" means Notes, if any, originally issued under the
Indenture after the Closing Date and which are of the same series as the Notes
issued on the Closing Date.

      "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on
February 8, 2001.

      "Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) in or of the equity
(which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person.

      "Capitalized Lease Obligation" means an obligation under a Capital Lease
and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with GAAP.

      A "Change of Control" shall be deemed to have occurred at such time as
either of the following events shall occur:

            (1) there shall be consummated any consolidation or merger of the
      Issuer in which the Issuer is not the continuing or surviving corporation
      or pursuant to which the Issuer's Voting Stock would be converted into
      cash, securities or other property, other than a merger of the Issuer in
      which the holders of the Issuer's Voting Stock immediately prior to the
      merger have the same or greater proportionate ownership, directly or
      indirectly, of the Voting Stock of the surviving corporation immediately
      after such merger as they had of the Issuer's Voting Stock immediately
      prior to such merger; or

            (2) there is a report filed by any Person, including its Affiliates
      and Associates, on Schedule 13D or TO (or any successor schedule, form or
      report) pursuant to the Exchange Act, disclosing that such Person (for the
      purposes of this definition only, the term "Person" shall include a
      "person" within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
      Exchange Act or any successor provision to either of the foregoing) has
      become the beneficial owner (as the term "beneficial owner" is defined
      under Rule 13d-3 or any successor rule or regulation promulgated under the
      Exchange Act) of 50% or more of the voting power of the Issuer's Voting
      Stock then outstanding;

provided, however, that a Person shall not be deemed beneficial owner of, or
to own beneficially,

            (A) any securities tendered pursuant to a tender or exchange offer
      made by or on behalf of such Person or any of such Person's Affiliates or
      Associates until such tendered securities are accepted for purchase or
      exchange thereunder, or

            (B) any securities if such beneficial ownership (x) arises solely as
      a result of a revocable proxy delivered in response to a proxy or consent
      solicitation made pursuant to, and in accordance with, the applicable
      rules and regulations under the Exchange Act, and

                                       15
<PAGE>
      (y) is not also then reportable on Schedule 13D (or any successor
      schedule, form or report) under the Exchange Act.

Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred if at any time the Issuer, any Subsidiary of the Issuer, any employee
stock ownership plan or any other employee benefit plan of the Issuer or any
Subsidiary of the Issuer, or any Person holding the Issuer's Voting Stock for or
pursuant to the terms of any such employee benefit plan, files or becomes
obligated to file a report under or in response to Schedule 13D or Schedule TO
(or any successor schedule, form or report) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 50%
or otherwise.

      "Change of Control Business Day" means a day on which banking institutions
are not authorized or required by law or regulation to close in The City of New
York.

      "Closing Date" means December 14, 2001.

      "Common Stock" of any Person means all Capital Stock of such Person that
is generally entitled to:

            (1)   vote in the election of directors of such Person or

            (2) 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 Adjusted Net Income" of the Issuer means, for any period,
the Consolidated Net Income of the Issuer and its Restricted Subsidiaries for
such period, provided that

            (1) the Net Income of any Person acquired in a pooling of interests
      transaction for any period prior to the date of such acquisition shall be
      excluded and

            (2) the Net Income of any Person which is not a Restricted
      Subsidiary or is an Equity Method Person shall be included only to the
      extent of the amount of cash dividends or distributions paid by it to the
      Issuer or a Restricted Subsidiary during such period.

      "Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of:

            (1) the sum, without duplication, of Consolidated Adjusted Net
      Income, Consolidated Interest Expense (but only to the extent that such
      Consolidated Interest Expense reduces such Consolidated Adjusted Net
      Income for such period), Consolidated Tax Expense, depreciation and
      amortization (including, without limitation, previously capitalized
      interest amortized to cost of sales), in each case for such period, of the
      Issuer and its Restricted Subsidiaries (determined on a consolidated basis
      in accordance with GAAP) to

                                       16
<PAGE>
            (2)   Consolidated Interest Expense of the Issuer and its
      Restricted Subsidiaries for such period;

provided, however, that in making such computation, the Consolidated Interest
Expense attributable to interest on any Indebtedness computed on a pro forma
basis and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period unless such interest rate has been fixed by hedging or other similar
contracts or agreements, in which case such interest rate shall be deemed to be
equal to such fixed rate of interest.

      "Consolidated Interest Expense" means, for any period, the aggregate
amount of interest which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" or any like caption on a consolidated income
statement of the Issuer and its Restricted Subsidiaries (including, but not
limited to, imputed interest on Capitalized Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to letters of credit 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 non-cash interest expense (other than previously
capitalized interest amortized to cost of sales)) plus, without duplication, all
capitalized interest of the Issuer and its Restricted Subsidiaries for such
period and all interest incurred or paid by the Issuer or any of its Restricted
Subsidiaries under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of the Issuer for such period,
in each case determined on a consolidated basis in accordance with GAAP.

      "Consolidated Net Income" of the Issuer means, for any period, the
consolidated Net Income of the Issuer and its Restricted Subsidiaries for such
period, determined in accordance with GAAP.

      "Consolidated Net Worth" means the consolidated shareholders' equity of
the Issuer; provided that, for purposes of computing Consolidated Net Worth, all
Subsidiaries of the Issuer whose accounts are consolidated with those of the
Issuer under GAAP shall be treated as if they were Wholly Owned Subsidiaries of
the Issuer, whether or not they are in fact Wholly Owned Subsidiaries of the
Issuer.

      "Consolidated Tax Expense" of the Issuer means, for any period, the
consolidated federal, state, local and foreign tax expense of the Issuer and its
Restricted Subsidiaries for such period, determined in accordance with GAAP.

      "Default" means any event or condition which is or, with notice or lapse
of time or both, would be an Event of Default.

      "Disqualified Capital 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 other than solely for Qualified Capital Stock, pursuant to a sinking
fund obligation or otherwise, or is redeemable or required to be repurchased or
repaid at the option of the holder thereof for consideration other than solely
for

                                       17
<PAGE>
Qualified Capital Stock, in whole or in part, on or prior to the final maturity
date of the Notes; provided that, in the case of any Restricted Domestic
Subsidiary through which the Issuer conducts any real estate joint venture, the
fact that any participant in such joint venture who holds Capital Stock of such
Restricted Domestic Subsidiary may have the right, pursuant to a "buy-sell"
agreement or similar arrangement, to require that the Issuer or any other
Subsidiary of the Issuer purchase such Capital Stock from such joint venturer,
shall not cause such Capital Stock to be deemed Disqualified Capital Stock.

      "Equity Method Person" means, as of any date of determination, any Person
(other than a Subsidiary of the Issuer) which is or is required to be accounted
for by the Issuer by the equity method of accounting in the Issuer's
consolidated financial statements in accordance with GAAP.

      "Equity Offering" means any public or private sale of Common Stock of the
Issuer (excluding Disqualified Capital Stock), other than public offerings with
respect to Common Stock of the Issuer registered on Form S-8 (or any successor
form).

      "Event of Default", when used with respect to the Notes, has the meaning
specified in the Section 24(a) of this Officers' Certificate.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Excluded Debt" means any Indebtedness of the Issuer or its Restricted
Subsidiaries which is:

            (1) subordinated (subject to the rights of holders of Senior
      Indebtedness) in right of payment to the Notes (upon liquidation or
      otherwise) at least to the extent that the Notes are subordinated to the
      Senior Indebtedness and

            (2) matures after, and is not redeemable mandatorily or at the
      option of the holder thereof prior to, the final maturity date of the
      Notes.

      "Existing Credit Facilities" means the 2000 Revolving Credit Facility and
the 2000 Term Loan Agreement, dated as of October 3, 2000 among the Issuer, the
banks party thereto, Bank of America N.A., as administrative agent, Credit
Lyonnais Los Angeles Branch, as syndication agent, Bank One, NA, as
documentation agent, and Banc of America Securities LLC, as lead arranger and
sole book manager, and any credit facility which is an extension or renewal
thereof (including, in each case, any increase in the amount of credit available
thereunder).

      "Existing Indebtedness" means all Indebtedness of the Issuer and its
Restricted Subsidiaries that is outstanding on the Closing Date.

      "GAAP" means generally accepted accounting principles as in effect and
implemented by the Issuer from time to time.

      A "guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Indebtedness of any other
Person including, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or

                                       18
<PAGE>
otherwise, of such Person to purchase or pay principal of or interest on (or
advance or supply funds or pledge assets for the purchase or payment of or
payment of interest on) Indebtedness of such other Person (whether by agreement
to provide additional capital or to maintain financial condition or other
similar agreement).

      "incur" has the meaning set forth in Section 16(a) of this Officers'
Certificate.

      "Indebtedness" means:

            (1) any liability of any Person (a) for borrowed money or for the
      deferred purchase price of property or services (other than current
      liabilities, including Trade Payables, arising in the ordinary course of
      business) or which is evidenced by a note, bond, debenture or similar
      instrument, and which would appear as a liability upon a balance sheet of
      such Person prepared on a consolidated basis in accordance with GAAP, or
      (b) for the payment of money relating to a Capitalized Lease Obligation;

            (2) any liability of such Person in respect of letters of credit or
      other similar instruments (or reimbursement obligations with respect
      thereto), but this clause (2) does not include letters of credit provided
      in the ordinary course of business and securing performance (and not
      financial) obligations and performance, completion, surety or similar
      bonds or obligations provided in the ordinary course of business;

            (3) any liability or obligation of others described in clause (1) or
      (2) with respect to which such Person has made a guarantee or similar
      arrangement, directly or indirectly (to the extent of such guarantee or
      arrangement), but this clause (3) does not include obligations in respect
      of banker's acceptances and performance, completion, surety or similar
      bonds or obligations provided in the ordinary course of business; and

            (4) all Indebtedness of others secured by a Lien (other than
      assessment district and similar Liens arising in connection with municipal
      financings) on any asset of such Person, whether or not such Indebtedness
      is assumed by such Person.

The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations described above and the
maximum liability of such Person for any such contingent obligations at such
date. To the extent such Person guarantees the obligation of another Person to
pay interest on Indebtedness owed by such other Person, then a designated
percentage of the interest guaranteed or the principal amount of the underlying
Indebtedness, as the case may be, shall be deemed Indebtedness of the referent
Person. For purposes of this definition, the amount of such deemed Indebtedness
of the referent Person shall be equal to the lesser of (a) the aggregate
principal amount of the underlying Indebtedness relating to such interest
guarantee and (b) the aggregate amount of interest due and payable over the term
of such Indebtedness (or the term of the Notes, if shorter) determined based
upon the rate of interest in effect as of the date of such determination,
together with the maximum prepayment premium or penalty which could become due
or payable with respect to such Indebtedness if such Indebtedness were prepaid
prior to the maturity of the Notes.

      "Investment" of any Person means:

                                       19
<PAGE>

            (1)   all investments by such Person in any other Person in the
      form of loans, advances or capital contributions,

            (2)   all payments of Indebtedness or other obligations of any
      other Person by such Person,

            (3) all purchases (or other acquisitions for consideration) by such
      Person of Indebtedness, Capital Stock or other securities of any other
      Person, and

            (4) all other items that would be classified as investments
      (including, without limitation, purchases of assets outside the ordinary
      course of business) on a balance sheet of such Person prepared in
      accordance with GAAP.

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind 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 statute) of any
jurisdiction).

      "Mortgage Finance Subsidiary" means Kaufman and Broad Mortgage Company,
an Illinois corporation.

      "Net Cash Proceeds" means the cash proceeds received by the Issuer from
any Equity Offering, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.

      "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however,

            (1) any gain (but not loss) realized upon the sale or other
      disposition (including, without limitation, dispositions pursuant to sale
      and leaseback transactions) of any real property or equipment of such
      Person which is not sold or otherwise disposed of in the ordinary course
      of business, and

            (2) any gain (but not loss) realized upon the sale or other
      disposition of any Capital Stock of such Person or any of its Restricted
      Subsidiaries owned by such Person.

      "Non-Recourse Indebtedness" means Indebtedness secured by a Lien on
property to the extent that the liability for such Indebtedness (and any
interest thereon) is limited to the security of such property without liability
on the part of the Issuer or any of its Subsidiaries for any deficiency,
including liability by reason of any agreement by the Issuer or any of its
Subsidiaries to provide additional capital or maintain the financial condition
of or otherwise support the credit of the Person incurring such Indebtedness.

      "Notes" means the 8-5/8% Senior Subordinated Notes due 2008 of the Issuer
issued under the Indenture, including, without limitation, any Additional Notes
which may be issued.

                                       20
<PAGE>

      "Permitted Liens" means:

            (1) 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;

            (2) 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;

            (3) 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;

            (4) 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;

            (5) judgment and other similar Liens arising in connection with
      court proceedings, provided that either (A) the execution or enforcement
      of each such Lien is effectively stayed and the claims secured thereby are
      being contested in good faith by appropriate proceedings timely commenced
      and diligently prosecuted or (B) the aggregate amount of the claims
      secured thereby does not exceed $10,000,000 at any time;

            (6) easements, rights-of-way, restrictions and other similar charges
      or encumbrances not materially interfering with the ordinary conduct of
      the business of the Issuer and its Subsidiaries;

            (7)   leases or subleases granted to others not materially
      interfering with the ordinary conduct of the business of the Issuer and
      its Subsidiaries;

            (8) Liens securing Refinancing Indebtedness, provided that such
      Liens only extend to the property or assets securing the Indebtedness
      being refinanced, such refinanced Indebtedness was previously secured by
      similar Liens on such property or assets and the Indebtedness and other
      obligations secured by such Liens are not increased;

            (9) Liens existing on the Closing Date, provided that the
      Indebtedness secured by such Liens is not increased (except pursuant to
      the terms of such Indebtedness as in effect on the Closing Date) and that
      no such Lien extends to any property or assets of the Issuer or any
      Subsidiary other than the property or assets subject to such Lien on the
      Closing Date;

                                       21
<PAGE>

            (10)  any contract to sell an asset provided such sale is
      otherwise permitted under the Indenture and the Notes;

            (11) Liens existing on property or assets of any entity (except an
      entity formed or organized by or on behalf of the Issuer for purposes
      other than to act as an acquisition vehicle) at the time it becomes a
      Restricted Domestic Subsidiary, which Liens were not created or assumed in
      contemplation of, or in connection with, such entity becoming a Restricted
      Domestic Subsidiary and which extend only to such property or assets,
      provided that the Indebtedness secured by such Liens is not increased
      (except pursuant to the terms of such Indebtedness as in effect on the
      date such entity becomes a Restricted Domestic Subsidiary, so long as such
      terms are not altered, in connection with or in contemplation of such
      transaction, to provide for an increase in such Indebtedness);

            (12) Liens existing on property or assets of any entity (except an
      entity formed or organized by or on behalf of the Issuer for purposes
      other than to act as an acquisition vehicle) at the time it is merged or
      consolidated with or into the Issuer or any of its Restricted Domestic
      Subsidiaries, which Liens were not created or assumed in contemplation of,
      or in connection with, such transaction and which extend only to such
      property or assets, provided that the Indebtedness secured by such Liens
      is not increased (except pursuant to the terms of such Indebtedness as in
      effect on the date of such transaction, so long as such terms are not
      altered, in connection with or in contemplation of such transaction, to
      provide for an increase in such Indebtedness);

            (13) Liens existing on property or assets at the time of the
      acquisition thereof by the Issuer or any of its Restricted Domestic
      Subsidiaries, which Liens were not created or assumed in contemplation of,
      or in connection with, such acquisition and which extend only to such
      property or assets, provided that the Indebtedness secured by such Liens
      is not increased (except pursuant to the terms of such Indebtedness as in
      effect on the date of such acquisition, so long as such terms are not
      altered, in connection with or in contemplation of such acquisition, to
      provide for an increase in such Indebtedness);

            (14) Liens on real property and improvements securing Indebtedness
      of the Issuer or any of its Restricted Subsidiaries incurred to finance
      the acquisition or improvement after the Closing Date of such real
      property, which Liens are either existing at the time of such acquisition
      or at the time of completion of such improvement or created within six
      months after such acquisition or improvement;

            (15) Liens securing Indebtedness in an aggregate amount at any time
      outstanding not to exceed 10% of the sum of (A) the Issuer's Consolidated
      Net Worth at such time plus (B) the consolidated minority interests of the
      Issuer (determined in accordance with GAAP) at such time;

            (16) Liens arising as the result of the rights of a third party to
      receive, or the granting, pledging or transferring to a third party of
      rights to receive, payments from any Restricted Foreign Subsidiary in
      return for payments made by or on behalf of such third party to the Issuer
      or a Restricted Subsidiary of the Issuer (or to a Person designated by the
      Issuer or a Restricted Subsidiary of the Issuer, which Person is not a
      Subsidiary or

                                       22
<PAGE>
      Affiliate of the Issuer) in an approximately equal amount (after giving
      effect to adjustments reflecting the time value of money);

            (17)  Liens securing Indebtedness owed to the Issuer or any
      Restricted Domestic Subsidiary by another Restricted Domestic
      Subsidiary;

            (18)  rights of banks arising by operation of law to set off
      deposits against debts owed to said banks; and

            (19) any interest or title of a lessor in property subject to any
      Capitalized Lease Obligation (other than in property owned by the Issuer
      or any of its Restricted Domestic Subsidiaries on the Closing Date and
      not, as of such date, subject to any such Capitalized Lease Obligation),
      which Capitalized Lease Obligation is entered into within six months of
      the acquisition of such property by the Issuer or such Restricted Domestic
      Subsidiary.

      "Qualified Capital Stock" means Capital Stock other than Disqualified
Capital Stock.

      "Refinancing Indebtedness" means Indebtedness that solely refunds,
refinances or extends, and is incurred within six months of the scheduled
maturity date or a mandatory repurchase date or optional redemption date of, any
Notes, Existing Indebtedness (excluding any Existing Indebtedness repaid with
the proceeds from the sale of the Notes) or other Indebtedness incurred by the
Issuer or its Restricted Subsidiaries pursuant to the terms of the Indenture and
the Notes, but only to the extent that:

            (1) if the Indebtedness being refunded, refinanced or extended is
      subordinated to the Notes, the Refinancing Indebtedness is also
      subordinated to the Notes at least to the extent and in the manner as such
      Indebtedness,

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

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

            (4) such Refinancing Indebtedness is incurred by the same Person
      that initially incurred the Indebtedness being refunded, refinanced or
      extended except that (a) the Issuer may incur Refinancing Indebtedness to
      refund, refinance or extend Indebtedness of any Restricted Subsidiary and
      (b) any Restricted Subsidiary may incur Refinancing Indebtedness to
      refund, refinance or extend Indebtedness of any other Restricted
      Subsidiary.

      "Restricted Domestic Subsidiary" means, as of any date of
determination, a Restricted Subsidiary

                                       23
<PAGE>
            (1)   that is organized under the laws of the United States of
      America or any state thereof or the District of Columbia and

            (2) the majority of the assets of which (as reflected on a balance
      sheet of such Subsidiary prepared in accordance with GAAP) is located in
      the United States of America.

      "Restricted Foreign Subsidiary" means, as of any date of determination, a
Restricted Subsidiary that is not a Restricted Domestic Subsidiary.

      "Restricted Payment" means, with respect to any Person,

            (1) the declaration or payment of any dividend or the making of any
      other payment or distribution of cash, securities or other property in
      respect of such Person's Capital Stock or in respect of any warrants,
      options or other rights (other than convertible or exchangeable debt
      securities of such Person) to purchase or acquire such Person's Capital
      Stock (except that a dividend payable solely in Qualified Capital Stock of
      the Issuer shall not constitute a Restricted Payment),

            (2) any payment on account of the purchase, redemption, retirement
      or other acquisition for value of such Person's Capital Stock or any
      warrants, options or other rights (other than convertible or exchangeable
      debt securities of such Person) to purchase or acquire such Person's
      Capital Stock, or any other payment or distribution made in respect
      thereof, either directly or indirectly, or

            (3) any principal payment, redemption, repurchase, defeasance or
      other acquisition or retirement, prior to scheduled principal payment or
      scheduled maturity, of Indebtedness (other than collateralized mortgage
      obligations issued by Subsidiaries of the Mortgage Finance Subsidiary) of
      the Issuer or any of its Subsidiaries which is subordinated in right of
      payment to the Notes;

provided, however, that with respect to the Issuer and its Restricted
Subsidiaries, Restricted Payments shall not include

            (a) any payment described in clause (1) or (2) above made to the
      Issuer or any of its Restricted Subsidiaries by any of the Issuer's other
      Restricted Subsidiaries,

            (b) any exchange offer, but only to the extent the Issuer exchanges
      solely Capital Stock of the Issuer (other than Disqualified Capital Stock)
      for Indebtedness of the Issuer or a Restricted Subsidiary in such exchange
      offer or

            (c) any redemption, repurchase or retirement of Indebtedness (the
      Indebtedness being so redeemed, repurchased or retired being hereinafter
      called "Subject Indebtedness") described in clause (3) above if made from
      the proceeds of Indebtedness which (x) is subordinated to the Notes to the
      same extent as the Subject Indebtedness, (y) is scheduled to mature either
      no earlier than the Subject Indebtedness or after the scheduled maturity
      date of the Notes and (z) has a Weighted Average Life to Maturity at

                                       24
<PAGE>
      the time such Indebtedness is incurred that is equal to or greater than
      the Weighted Average Life to Maturity of the Subject Indebtedness.

      "Restricted Significant Subsidiary" means any Restricted Subsidiary which
is a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X under
the Securities Act of 1933, as amended, and the Exchange Act (as such Regulation
S-X was in effect on June 1, 1996).

      "Restricted Subsidiary" means a Subsidiary of the Issuer which is not, as
of the determination date, an Unrestricted Subsidiary.

      "Subsidiary" of any Person means:

            (1) any corporation at least a majority of the aggregate voting
      power of the Common Stock of which is owned by such Person, directly or
      through one or more other Subsidiaries of such Person, and

            (2) any entity other than a corporation at least a majority of the
      Common Stock of which is owned by such Person, directly or through one or
      more other Subsidiaries of such Person.

      "Substitute Credit Facility" means any credit facility of the Issuer which
is created subsequent to the Closing Date and which replaces all or part of the
Existing Credit Facilities or a Substitute Credit Facility (and which may
provide for an increase in the amount of credit available thereunder), so long
as the Issuer is the borrower under such Substitute Credit Facility.

      "Unrestricted Subsidiary" means:

            (a)   the Mortgage Finance Subsidiary,

            (b)   any Subsidiary of the Mortgage Finance Subsidiary on the
      Closing Date,

            (c)   any other Subsidiary of the Issuer which is designated as
      an Unrestricted Subsidiary by the Issuer's Board of Directors, as
      provided below, and

            (d)   any Subsidiary of an Unrestricted Subsidiary;

provided that, in each case referred to in clause (a), (b), (c) or (d), the
creditors of such Subsidiary have no direct or indirect recourse (including, but
not limited to, recourse with respect to the payment of principal of or interest
on Indebtedness of such Subsidiary) to the Issuer or any of its Restricted
Subsidiaries.

The Board of Directors of the Issuer may designate an Unrestricted Subsidiary to
be a Restricted Subsidiary; provided that no such designation shall result in
any Restricted Subsidiary becoming a Subsidiary of any Unrestricted Subsidiary;
and provided, further that:

            (1) any such designation shall be deemed to be an incurrence by the
      Issuer and its Restricted Subsidiaries, as of the date of such
      designation, of the consolidated
<PAGE>

      Indebtedness (if any) of such designated Subsidiary and its Subsidiaries
      (if any) which are or are being designated as Restricted Subsidiaries,
      determined in accordance with GAAP, for purposes of the covenant described
      above in Section 16(a) of this Officers' Certificate,

            (2) immediately after giving effect to such designation and the
      deemed incurrence of any such additional Indebtedness (A) no Default or
      Event of Default shall have occurred and shall be continuing, (B) the
      Issuer could incur $1.00 of additional Indebtedness pursuant to the first
      paragraph of the covenant described above in Section 16(a) of this
      Officers' Certificate and (C) without limitation to clause (A) above, such
      designated Subsidiary and its Subsidiaries (if any) which are or are being
      designated as Restricted Subsidiaries are in compliance with the covenant
      described above in Section 16(b) of this Officers' Certificate.

Subject to the foregoing, the Board of Directors of the Issuer also may
designate any Restricted Subsidiary (together with its Subsidiaries (if any)) to
be an Unrestricted Subsidiary; provided that:

            (1) the consolidated shareholders' equity (determined in accordance
      with GAAP) of such designated Subsidiary and its Subsidiaries (if any) at
      the time of such designation shall be deemed to be an Investment by the
      Issuer in an Unrestricted Subsidiary at the time of such designation and
      shall reduce the amount of Investments which the Issuer and its Restricted
      Domestic Subsidiaries shall be permitted to make under the covenant
      described above in Section 16(e) of this Officers' Certificate and

            (2) immediately after giving effect to such designation and
      reduction of amounts available for Investments under such covenant, (A) no
      Default or Event of Default shall have occurred and shall be continuing,
      (B) the Issuer could incur $1.00 of additional Indebtedness pursuant to
      the first paragraph of the covenant described above in Section 16(a) of
      this Officers' Certificate and (C) the Issuer could make $1.00 of
      additional Investments in Unrestricted Subsidiaries pursuant to the
      covenant described above in Section 16(e) of this Officers' Certificate.

Any designation by the Board of Directors described above shall be evidenced to
the Trustee by the filing with the Trustee of a certified copy of the resolution
of the Issuer's Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and setting forth the underlying calculations supporting
such certification. As of the date of this Officers' Certificate, the only
Unrestricted Subsidiaries are the Mortgage Finance Subsidiary and its
Subsidiaries.

      "Voting Stock" means, with respect to any Person, the capital stock of
such Person having general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).

                                       26
<PAGE>
      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness or portion thereof at any date, the number of years obtained by
dividing:

            (1) the then outstanding principal amount of such Indebtedness or
      portion thereof, as the case may be, into

            (2) 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 of such Indebtedness or portion thereof, as
      the case may be, including payment at final maturity, in respect thereof,
      by (b) the number of years (calculated to the nearest one-twelfth) that
      will elapse between such date and the making of such payment.

      "Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any directors' qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more other Wholly Owned Subsidiaries of
such Person.

      (21) The Notes will be in substantially the form attached hereto as
Exhibit A, and the terms of the Notes as set forth in Exhibit A are hereby
incorporated herein and in the Indenture by reference.

      (22) SunTrust Bank, as successor to SunTrust Bank, Atlanta, shall be the
initial Trustee, paying agent, transfer agent and registrar for the Notes and
shall be empowered so to act through its agent in the Borough of Manhattan, The
City of New York.

      (23) Terms, whether or not capitalized, used in this Officers' Certificate
and not defined herein which are defined in the Indenture (other than terms
defined in another Officers' Certificate establishing the form or terms of
another series of Securities under the Indenture) shall have the respective
meanings given them in the Indenture.

      (24) Any deletions from, modifications of or additions to the defined
terms, Events of Default, covenants and other provisions of the Indenture with
respect to the Notes:

            (a) Section 5.1 of the Indenture is hereby amended and restated, but
      only insofar as it relates to the Notes, to read in full as follows, and
      the term "Event of Default", insofar (but only insofar) as such term
      relates to the Notes, shall have the meaning set forth below:

                  "SECTION 5.1 Event of Default Defined; Acceleration of
            Maturity; Waiver of Default. "Event of Default" with respect to the
            Notes, wherever used herein, means each one of the following events
            which shall have occurred and be continuing (whatever the reason for
            such Event of Default and whether it shall 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):

                                       27
<PAGE>
                  (a) default in the payment of any installment of interest upon
            any of the Notes as and when the same shall become due and payable,
            and continuance of such default for a period of 30 days; or

                  (b) default in the payment of all or any part of the principal
            of any of the Notes as and when the same shall become due and
            payable, either at maturity, upon any redemption at the option of
            the Issuer or repurchase at the option of the Holders, by
            declaration of acceleration or otherwise; or

                  (c) failure on the part of the Issuer duly to observe or
            perform any of the other covenants or agreements on the part of the
            Issuer contained in this Indenture (other than a covenant or
            agreement in respect of the Notes a default in the performance or
            breach of which is elsewhere in this Section 5.1 specifically dealt
            with or which has expressly been included in this Indenture solely
            for the benefit of one or more series of Securities other than the
            Notes) or in the Notes for a period of 60 days (or for 10 days in
            the case of any of the other covenants set forth in Section 7, 8,
            9,10 or 11 of the Officers' Certificate dated December 14, 2001
            establishing the form and terms of the Notes) after the date on
            which written notice specifying such failure, stating that such
            notice is a "Notice of Default" hereunder and demanding that the
            Issuer remedy the same, shall have been given by registered or
            certified mail, return receipt requested, or by overnight courier or
            by hand delivery with evidence of the receipt of such overnight
            courier or hand delivery by the Issuer, to the Issuer by the
            Trustee, or to the Issuer and the Trustee by the Holders of at least
            25% in aggregate principal amount of the Notes then Outstanding; or

                  (d) a court having jurisdiction in the premises shall enter a
            decree or order for relief in respect of the Issuer or any of its
            Restricted Significant Subsidiaries in an involuntary case under any
            applicable bankruptcy, insolvency or other similar law now or
            hereafter in effect, or appointing a receiver, liquidator, assignee,
            custodian, trustee, sequestrator (or similar official) of the Issuer
            or any of its Restricted Significant Subsidiaries or for any
            substantial part of the property of the Issuer or any of its
            Restricted Significant Subsidiaries or ordering the winding up or
            liquidation of the affairs of the Issuer or any of its Restricted
            Significant Subsidiaries, and such decree or order shall remain
            unstayed and in effect for a period of 60 consecutive days; or

                  (e) the Issuer or any of its Restricted Significant
            Subsidiaries shall commence a voluntary case under any applicable
            bankruptcy, insolvency or other similar law now or hereafter in
            effect, or consent to the entry of an order for relief in an
            involuntary case under any such law, or consent to the appointment
            or taking possession by a receiver, liquidator, assignee, custodian,
            trustee, sequestrator (or similar official) of the Issuer or any of
            its Restricted Significant Subsidiaries or for any substantial part

                                       28
<PAGE>
            of the property of the Issuer or any of its Restricted Significant
            Subsidiaries, or make any general assignment for the benefit of
            creditors; or

                  (f) a default under any mortgage, indenture or other
            instrument or agreement (including this Indenture with respect to
            any other series of Securities) under which there may be issued or
            by which there may be secured or evidenced any Indebtedness (other
            than Non-Recourse Indebtedness) of the Issuer or any Restricted
            Subsidiary, whether such Indebtedness existed on December 14, 2001
            or shall be created thereafter, if (a) such default results from the
            failure to pay any such Indebtedness when due (provided that no such
            failure to pay Indebtedness when due shall be deemed to have
            occurred so long as the Issuer or such Restricted Subsidiary, as the
            case may be, shall be contesting whether such Indebtedness is due in
            good faith by appropriate proceedings) or as a result of such
            default the maturity of such Indebtedness has been accelerated prior
            to its expressed maturity and (b) the sum of (x) the principal
            amount of such Indebtedness plus (y) the aggregate principal amount
            of all other such Indebtedness in default for failure to pay any
            such Indebtedness when due or the maturity of which has been so
            accelerated equals $20,000,000 or more, individually, or $40,000,000
            or more, in the aggregate, without such Indebtedness having been
            discharged or such acceleration having been rescinded or annulled
            within a period of 30 days after notice thereof shall have been
            given to the Issuer by the Trustee, or to the Issuer and the Trustee
            by the Holders of at least 25% in aggregate principal amount of the
            Notes then Outstanding.

            "If an Event of Default occurs and is continuing, then, and in each
      and every such case, either the Trustee or the Holders of not less than
      25% in aggregate principal amount of the Notes then Outstanding hereunder,
      by notice in writing to the Issuer (and to the Trustee if given by Holders
      of the Notes), may declare the principal of all Notes and interest accrued
      thereon, if any, to be due and payable immediately and, upon any such
      declaration the same shall become immediately due and payable.

            "The foregoing provisions, however, are subject to the condition
      that if, at any time after the principal of the Notes shall have been so
      declared due and payable, and before any judgment or decree for the
      payment of the moneys due shall have been obtained or entered as
      hereinafter provided, the Issuer shall pay or shall deposit with the
      Trustee a sum sufficient to pay all matured installments of interest upon
      all the Notes and the principal of any and all of the Notes which shall
      have become due otherwise than by acceleration (with interest upon such
      principal and, to the extent that payment of such interest is enforceable
      under applicable law, on overdue installments of interest, at the same
      rate as the rate of interest borne by the Notes to the date of such
      payment or deposit) and such amount as shall be sufficient to cover
      reasonable compensation to the Trustee and each predecessor Trustee, its
      agents, attorneys and counsel, and all other expenses

                                       29
<PAGE>
      and liabilities incurred, and all advances made, by the Trustee and each
      predecessor Trustee except as a result of negligence or bad faith, and if
      any and all Events of Default with respect to the Notes, other than the
      non-payment of the principal of Notes which shall have become due by
      acceleration, shall have been cured, waived or otherwise remedied as
      provided herein, then and in every such case the Holders of a majority in
      aggregate principal amount of all of the Notes then Outstanding, by
      written notice to the Issuer and to the Trustee, may waive all defaults
      with respect to the Notes and rescind and annul such declaration and its
      consequences, but no such waiver or rescission and annulment shall extend
      to or shall affect any subsequent default or shall impair any right
      consequent thereon."

      (b) Section 5.6 of the Indenture is hereby amended and restated, but only
insofar as it relates to the Notes, to read in full as follows:

            "SECTION 5.6 Limitations on Suits by Securityholders. No Holder of
      any Notes shall have any right by virtue or by availing of any provision
      of this Indenture to institute any action or proceeding at law or in
      equity or in bankruptcy or otherwise upon or under or with respect to this
      Indenture, or for the appointment of a trustee, receiver, liquidator,
      custodian or other similar official or for any other remedy hereunder,
      except (as provided in Section 5.7 of this Indenture) actions or
      proceedings for payment of overdue principal or interest, unless such
      Holder previously shall have given to the Trustee written notice of
      default and of the continuance thereof, as hereinbefore provided, and
      unless also the Holders of not less than 25% in aggregate principal amount
      of the Notes then Outstanding shall have made written request upon the
      Trustee to institute such action or proceedings in its own name as trustee
      hereunder and shall have offered to the Trustee such reasonable indemnity
      as it may require against the reasonable costs, expenses and liabilities
      to be incurred therein or thereby and the Trustee for 60 days after its
      receipt of such notice, request and offer of indemnity shall have failed
      to institute any such action or proceeding and no direction inconsistent
      with such written request by the Holders of a majority in principal amount
      of the Notes then Outstanding shall have been given to the Trustee
      pursuant to Section 5.9; it being understood and intended, and being
      expressly covenanted by the taker and Holder of every Note with every
      other taker and Holder of any Note and the Trustee, that no one or more
      Holders of Notes shall have any right in any manner whatever by virtue or
      by availing of any provision of this Indenture to affect, disturb or
      prejudice the rights of any such Holder of Notes, or to obtain or seek to
      obtain priority over or preference to any other such Holder or to enforce
      any right under this Indenture, except in the manner herein provided and
      for the equal, ratable and common benefit of all Holders of Notes. For the
      protection and enforcement of the provisions of this Section, each and
      every Holder of Notes and the Trustee shall be entitled to such relief as
      can be given either at law or in equity."

      (c) Section 5.9 of the Indenture is hereby amended and restated, but only
insofar as it relates to the Notes, to read in full as follows:

                                       30
<PAGE>
            "SECTION 5.9 Control by Holders of Notes. The Holders of a majority
      in aggregate principal amount of the Notes at the time Outstanding shall
      have the right to direct the time, method, and place of conducting any
      proceeding for any remedy available to the Trustee, or exercising any
      trust or power conferred on the Trustee with respect to the Notes by this
      Indenture; provided that such direction shall not be otherwise than in
      accordance with law and the provisions of this Indenture and provided
      further that (subject to the provisions of Section 6.1) the Trustee shall
      have the right to decline to follow any such direction if the Trustee,
      being advised by counsel, shall determine that the action or proceeding so
      directed may not lawfully be taken or if the Trustee in good faith by its
      board of directors, the executive committee, or a trust committee of
      directors or Responsible Officers of the Trustee shall determine that the
      action or proceedings so directed would involve the Trustee in personal
      liability or if the Trustee in good faith shall so determine that the
      actions or forbearances specified in or pursuant to such direction would
      be unduly prejudicial to the interests of Holders of the Notes not joining
      in the giving of said direction, it being understood that (subject to
      Section 6.1) the Trustee shall have no duty to ascertain whether or not
      such actions or forbearances are unduly prejudicial to such Holders.

            "Nothing in this Indenture shall impair the right of the Trustee in
      its discretion to take any action deemed proper by the Trustee and which
      is not inconsistent with such direction or directions by Holders of the
      Notes."

      (d) Section 5.10 of the Indenture is hereby amended and restated, but only
insofar as it relates to the Notes, to read in full as follows:

            "SECTION 5.10. Waiver of Past Defaults. Prior to a declaration of
      the acceleration of the maturity of the Notes as provided in Section 5.1,
      the Holders of not less than a majority in aggregate principal amount of
      the Notes at the time Outstanding may on behalf of the Holders of all the
      Notes waive any past default or Event of Default, except a default in
      respect of a covenant or provision hereof that cannot be modified or
      amended without the consent of each Holder of any Notes affected. In the
      case of any such waiver, the Issuer, the Trustee and the Holders of all
      Notes shall be restored to their former positions and rights hereunder,
      respectively; but no such waiver shall extend to any subsequent or other
      default or impair any right consequent thereon.

            "Upon any such waiver, such default shall cease to exist and be
      deemed to have been cured and not to have occurred, and any Event of
      Default arising therefrom shall be deemed to have been cured, and not to
      have occurred for every purpose of this Indenture; but no such waiver
      shall extend to any subsequent or other default or Event of Default or
      impair any right consequent thereon."

      (e) Section 5.12 of the Indenture is hereby amended and restated, but only
insofar as it relates to the Notes, to read in full as follows:

                                       31
<PAGE>
            "SECTION 5.12. Right of Court to Require Filing of Undertaking to
      Pay Costs. All parties to this Indenture agree, and each Holder of any
      Note by his acceptance thereof shall be deemed to have agreed, that any
      court may in its discretion require, in any suit for the enforcement of
      any right or remedy under this Indenture or in any suit against the
      Trustee for any action taken, suffered or omitted by it as Trustee, the
      filing by any party litigant in such suit of an undertaking to pay the
      costs of such suit, and that such court may in its discretion assess
      reasonable costs, including reasonable attorneys' fees, against any party
      litigant in such suit, having due regard to the merits and good faith of
      the claims or defenses made by such party litigant; but the provisions of
      this Section shall not apply to any suit instituted by the Trustee, to any
      suit instituted by any Holder or group of Holders holding in the aggregate
      more than 10% in aggregate principal amount of the Notes then Outstanding,
      or to any suit instituted by any Holder for the enforcement of the payment
      of the principal of or interest on any Note on or after the due date
      expressed in such Note or any date fixed for redemption or repurchase."

      (f) Section 6.2(f) of the Indenture is hereby amended and restated, but
only insofar as it relates to the Notes, to read in full as follows:

            "(f) prior to the occurrence of an Event of Default with respect to
      the Notes hereunder and after the curing or waiving of all Events of
      Default with respect to the Notes, the Trustee shall not be bound to make
      any investigation into the facts or matters stated in any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      consent, order, approval, appraisal, bond, debenture, note, coupon,
      security, or other paper or document unless requested in writing so to do
      by the Holders of not less than a majority in aggregate principal amount
      of the Notes then Outstanding; provided that, if the payment within a
      reasonable time to the Trustee of the costs, expenses or liabilities
      likely to be incurred by it in the making of such investigation is, in the
      opinion of the Trustee, not reasonably assured to the Trustee by the
      security afforded to it by the terms of this Indenture, the Trustee may
      require reasonable indemnity against such expenses or liabilities as a
      condition to proceeding; the reasonable expenses of every such
      investigation shall be paid by the Issuer or, if paid by the Trustee or
      any predecessor Trustee, shall be repaid by the Issuer upon demand; and"

      (g) The first paragraph of Section 8.2 of the Indenture is hereby amended
and restated, but only insofar as it relates to the Notes, to read in full as
follows:

            "SECTION 8.2. Supplemental Indentures With Consent of
      Securityholders. With the consent (evidenced as provided in Article Seven)
      of the Holders of not less than a majority in aggregate principal amount
      of the Notes at the time Outstanding, the Issuer, when authorized by a
      resolution of its Board of Directors (which resolution may provide general
      terms or parameters for such action and may provide that the specific
      terms of such action may be determined in accordance with or pursuant to
      an Issuer Order), and the Trustee may, from time to time and at any time,
      enter into an indenture or indentures supplemental

                                       32
<PAGE>
      hereto for the purpose of adding any provisions to or changing in any
      manner or eliminating any of the provisions of this Indenture or of any
      supplemental indenture insofar as such provisions relate to the Notes or
      of modifying in any manner the rights of the Holders of Notes; provided,
      that no such supplemental indenture shall (a) extend the final maturity of
      any Note or any date on which the Change of Control Repurchase Price of
      any Note is payable, or reduce the principal amount thereof, or reduce the
      rate or extend the time of payment of interest thereon, or reduce any
      amount payable on redemption or repurchase thereof, or make the principal
      thereof or interest thereon payable in any coin or currency other than
      that provided in the Notes or in accordance with the terms thereof, or
      modify the percentage of Holders of Notes required pursuant to Section 5.1
      or 5.10 to waive any default or to rescind and annul any declaration of
      acceleration, or alter the provisions of Section 11.11 or 11.12 or impair
      or affect the right of any Holder of Notes to institute suit for the
      payment thereof or any right of repayment, repurchase or redemption at the
      option of the Holders of Notes, in each case without the consent of the
      Holder of each Note so affected, or (b) reduce the aforesaid percentage of
      Notes, the consent of the Holders of which is required for any such
      supplemental indenture, without the consent of the Holders of each Note so
      affected."

      (h) Section 9.1 of the Indenture is hereby amended and restated, but only
insofar as it relates to the Notes, to read in full as follows:

            "SECTION 9.1. Issuer May Consolidate, etc., on Certain Terms. The
      Issuer covenants that it will not merge or consolidate with or into any
      other Person or sell, lease or convey all or substantially all of its
      assets to any other Person, unless:

                  (1) either the Issuer shall be the continuing corporation, or
            the successor corporation (if other than the Issuer) or the Person
            that acquires by sale, lease or conveyance all or substantially all
            the assets of the Issuer shall be a corporation organized and
            existing under the laws of the United States of America or any State
            thereof or the District of Columbia and shall expressly assume the
            due and punctual payment of the principal of and interest on all the
            Notes, according to their tenor, and the due and punctual
            performance and observance of all of the covenants and conditions in
            this Indenture and the Notes to be performed or observed by the
            Issuer, by supplemental indenture satisfactory to the Trustee,
            executed and delivered to the Trustee by such corporation,

                  (2) immediately after giving effect to such transaction, no
            Default or Event of Default shall have occurred and be continuing,

                  (3) immediately after giving effect to such transaction, the
            Issuer or such corporation, as the case may be, would be able to
            incur at least $0.50 of additional Indebtedness pursuant to the
            first paragraph of the

                                       33
<PAGE>
            covenant set forth in Section 16(a) of the Officers' Certificate
            dated December 14, 2001 establishing the form and terms of the
            Notes, and

                  (4) the Issuer shall have delivered to the Trustee an
            Officers' Certificate and Opinion of Counsel, each stating that such
            transaction and such supplemental indenture comply with this
            Indenture and the Notes, and that all conditions precedent relating
            to such transaction have been complied with."

      (i) Clause (iii) of Section 10.1(A) of the Indenture (which clause (iii)
appears on page 66 of the Indenture) is hereby amended and restated, but only
insofar as relates to the Notes, to read in full as follows:

      "(iii) the obligation of the Issuer to pay the principal of and interest
      on the Notes and the rights of the Holders of the Notes to receive
      payments of principal thereof and interest thereon, in each case upon the
      original stated due dates therefor (but not upon acceleration) or dates
      called for redemption,"

      (j) Section 10.1(B)(b) of the Indenture is hereby amended, but only
insofar as it relates to the Notes, by deleting the references therein to
Sections 5.1(e) and (f) of the Indenture and replacing the same with references
to Sections 5.1(d) and (e) of the Indenture, the purpose of such replacement
being to reflect the amendment and restatement of such Section 5.1 pursuant to
Section 24(a) of this Officers' Certificate.

      (k) Section 10.1(C)(b) of the Indenture is hereby amended, but only
insofar as it relates to the Notes, by deleting the references therein to
Sections 5.1(e) and (f) of the Indenture and replacing the same with references
to Sections 5.1(d) and (e) of the Indenture, the purpose of such replacement
being to reflect the amendment and restatement of such Section 5.1 pursuant to
Section 24(a) of this Officers' Certificate.

      (l) Pursuant to Section 10.1(C) of the Indenture, it is hereby expressly
provided that Section 9.1 of the Indenture (as amended and restated pursuant to
Section 24(h) of this Officers' Certificate) and the covenants set forth in
Sections 7, 8, 9, 10, 11 and 16 (other than Section 16(h) and other than the
covenant of the Issuer in Section 16(f) to preserve and keep in full force and
effect its corporate existence) of this Officers' Certificate shall be subject
to covenant defeasance upon the terms and subject to the conditions set forth in
Section 10.1(C) of the Indenture.

      (m) To the extent that Section 5.1, 5.9, 5.10, 5.12, 6.2(f), or 8.2 of the
Indenture (as set forth in the Indenture, as originally executed and delivered,
and not as amended by this Officers' Certificate) or any other provisions of the
Indenture shall require the action or vote of two or more series of Securities
under the Indenture acting together as a class, the Notes shall be excluded from
such class for all purposes, it being expressly understood and agreed that the
Notes shall be entitled to act alone in respect of all matters under the
Indenture and that no other series of Securities issued under the Indenture
shall have any right to participate in or vote in connection with any action,
vote or other matter relating to the Notes.

                                       34
<PAGE>
            (n) Except as otherwise expressly provided in Section 24(m) of this
      Officers' Certificate, all references in the Notes and in the Indenture to
      "the Indenture", "this Indenture" or to terms or provisions contained or
      set forth in the Indenture or the Notes (and all references of like
      import) shall be deemed to mean and include the terms and provisions of
      the Notes set forth in this Officers' Certificate, which shall for all
      purposes be deemed to constitute a part of the Indenture and the Notes.

            (o) For purposes of the Indenture, as amended hereby, the term
      "Notes" shall mean the series of Securities established pursuant to this
      Officers' Certificate.

      (25) Captions and headings in this Officers' Certificate are for
convenience of reference only and shall not affect the construction hereof.

      (26) Each of the undersigned hereby further certifies, pursuant to Section
2.4(3) of the Indenture, that the form and terms of the Notes have been
established pursuant to Sections 2.1 and 2.3 of the Indenture and comply with
the Indenture.

      (27) The Notes will rank pari passu with the Issuer's 9-3/8% Senior
Subordinated Notes due 2003, 9-5/8% Senior Subordinated Notes due 2006 and
9-1/2% Senior Subordinated Notes due 2011.

      (28) The Issuer will not under any circumstances be required to pay any
additional amounts of the nature described in Section 2.3(16) of the Indenture
on Notes held by any Persons who are not U.S. Persons in respect of any tax,
assessment or governmental charge withheld or deducted with respect to payments
made on account of the Notes.

                            [Signature page follows]

                                       35
<PAGE>
      IN WITNESS WHEREOF, we have executed this Certificate on behalf of the
Issuer this 14th day of December, 2001.

[SEAL]

                                     -------------------------------------------
                                     Name:  William R. Hollinger
                                     Title: Senior Vice President and Controller

                                     -------------------------------------------
                                     Name:  Kimberly N. King
                                     Title: Corporate Secretary and Director,
                                            Corporate Legal Affairs

                                       36
<PAGE>
                                                                       EXHIBIT A

                                  FORM OF NOTE

                                     KB HOME

                    8-5/8% Senior Subordinated Note due 2008

[This paragraph to be included in Global Notes only - THIS NOTE IS A REGISTERED
GLOBAL SECURITY UNDER THE INDENTURE DESCRIBED ON THE REVERSE HEREOF. AS SUCH,
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.]

[This paragraph to be included in Global Notes only - Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a New
York corporation ("DTC"), to Issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.]

No. R-___                                                        $______________
                                                                 CUSIP 48666KAE9

      KB HOME, a Delaware corporation (the "Issuer"), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
__________________ Dollars at the Issuer's office or agency for said purpose in
the Borough of Manhattan, The City of New York, on December 15, 2008 in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts, and to pay
interest, semi-annually on June 15 and December 15 of each year, commencing June
15, 2002, on said principal sum in like coin or currency, at the rate of 8-5/8%
per annum at said office or agency from the June 15 or the December 15, as the
case may be, next preceding the date of this Note to which interest on the Notes
has been paid or duly provided for, unless the date hereof is a date to which
interest on the Notes has been paid or duly provided for, in which case from the
date of this Note, or unless no interest has been paid or duly provided for on
the Notes, in which case from December 14, 2001, until payment of said principal
sum has been made or duly provided for. Notwithstanding the foregoing, if the
date hereof is after June 1 or December 1, as

                                       37
<PAGE>
the case may be, and before the following June 15 or December 15, respectively,
this Note shall bear interest from such June 15 or December 15; provided, that
if the Issuer shall default in the payment of interest due on such June 15 or
December 15, then this Note shall bear interest from the next preceding June 15
or December 15 to which interest on the Notes has been paid or duly provided for
or, if no interest has been paid or duly provided for on the Notes, from
December 14, 2001. The interest so payable on any June 15 or December 15 will,
except as otherwise provided in the Indenture referred to on the reverse hereof,
be paid to the Person in whose name this Note is registered at the close of
business on the June 1 or the December 1 preceding such June 15 or December 15,
respectively, whether or not such date is a Business Day; provided that, except
as otherwise provided in the Indenture referred to on the reverse hereof,
interest may be paid, at the option of the Issuer, by mailing a check therefor
payable to the Holder entitled thereto at his last address as it appears on the
Note register or by wire transfer.

      Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

      This Note shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.

                                       38
<PAGE>
      IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                        KB HOME
[SEAL]

                                        By:
                                           -------------------------------------
                                        William R. Hollinger
                                        Senior Vice President and Controller

Attest:

---------------------------------
Kimberly N. King
Corporate Secretary and Director,
  Corporate Legal Affairs

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

      This is one of the Securities referred to in the within-mentioned Senior
Subordinated Debt Indenture.

                                        SUNTRUST BANK, as Trustee

                                        By:
                                           -------------------------------------
                                        Authorized Officer

                                       39
<PAGE>
                                     KB HOME

                    8-5/8% Senior Subordinated Note due 2008

      This Note is one of a duly authorized issue of 8-5/8% Senior Subordinated
Notes due 2008 (the "Notes") of the Issuer, issued pursuant to an indenture
dated as of November 19, 1996 (as the same may be amended or supplemented from
time to time, the "Indenture", which term, as used herein, includes the form and
terms of the Notes established by that certain Officers' Certificate of the
Issuer dated December 14, 2001), duly executed and delivered by the Issuer to
SunTrust Bank, as successor to SunTrust Bank, Atlanta, trustee (herein called,
together with any successor in such capacity, the "Trustee"). Reference is
hereby made to the Indenture and all indentures supplemental thereto for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the Holders of the Notes.

      Anything in this Note or the Indenture to the contrary notwithstanding, if
any principal of or premium, if any, or interest on the Notes is not paid when
due, then such overdue principal, premium, if any, and interest shall, to the
fullest extent permitted by law, bear interest at the rate of 8-5/8% per annum
until paid.

      The indebtedness evidenced by, and the payment of the principal of and
premium, if any, and interest on, and any other amount owing in respect of, the
Notes is, to the extent and in the manner provided in the Indenture, expressly
made subordinate and subject in right of payment to the prior payment in full of
all Senior Indebtedness (as defined in the Indenture) of the Issuer, and each
Holder of this Note, by his acceptance hereof, agrees to and shall be bound by
all the provisions of the Indenture relating to such subordination and
authorizes and directs the Trustee to take such action on his behalf as may be
necessary or appropriate to acknowledge or effectuate the subordination of the
indebtedness evidenced by this Note as provided in the Indenture and appoints
the Trustee his attorney-in-fact for any and all such purposes.

      In case an Event of Default shall have occurred and be continuing, the
principal of and accrued interest on all the Notes may be declared due and
payable, in the manner and with the effect, and subject to the conditions,
provided in the Indenture. The Indenture provides that in certain events such
declaration and its consequences may be rescinded and annulled by the Holders of
a majority in aggregate principal amount of the Notes then Outstanding and that,
prior to any such declaration, such Holders may waive any past default under the
Indenture except a default in the payment of principal of or premium, if any, or
interest on any of the Notes or a default in respect of another covenant or
provision of the Indenture that cannot be modified or amended without the
consent of each Holder affected and subject to certain further exceptions. Any
such waiver, rescission or annulment by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Note and any Note which may be issued in exchange or substitution
herefor, whether or not any notation thereof is made upon this Note or such
other Notes.

      To the extent permitted by, and as provided and subject to the limitations
in, the Indenture, the Issuer and the Trustee, with the consent of the Holders
of not less than a majority in aggregate principal amount of the Notes then
Outstanding, may execute supplemental

                                       40
<PAGE>
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or any supplemental indenture or modifying in
any manner the rights of the Holders.

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

      The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and any integral multiple of $1,000.

      At the office or agency of the Issuer referred to on the face hereof, and
in the manner and subject to the limitations provided in the Indenture, Notes
may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.

      Upon due presentation for registration of transfer of this Note at the
above-mentioned office or agency of the Issuer, a new Note or Notes of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Indenture.

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

      At any time prior to December 15, 2004, the Issuer at its option may
redeem Notes in an aggregate principal amount equal to up to 35% of the original
aggregate principal amount of the Notes (including any Additional Notes) with
the Net Cash Proceeds of one or more Equity Offerings, at any time or from time
to time, at a redemption price equal to 108.625% of the principal amount plus
accrued interest to the date fixed for redemption (provided that payments of
interest becoming due on or prior to a date fixed for redemption of the Notes
shall be payable to the Holders of the Notes registered as such at the close of
business on the relevant record date, subject to the terms and provisions of the
Indenture); provided that Notes (including any Additional Notes) with an
aggregate principal amount equal to at least $130,000,000 remain outstanding
after each such redemption; and provided further that notice of any such
redemption is mailed within 60 days after the closing date of the applicable
Equity Offering and, in any event not less than 30 nor more than 60 days prior
to the applicable redemption date, all in accordance with the requirements of
the Indenture. If less than all of the Notes are called for redemption, the
Trustee shall select, in such manner as it deems appropriate and fair, the Notes
(or portions thereof) to be redeemed. This Note is not otherwise redeemable at
the option of the Issuer.

      Subject to payment by the Issuer of a sum sufficient to pay the amount due
on redemption, interest on this Note (or portion hereof if this Note is redeemed
in part) shall cease to accrue upon the date duly fixed for redemption of this
Note (or portion hereof if this Note is redeemed in part).

      If at any time there occurs a Change of Control with respect to the
Issuer, each Holder of Notes will have the right, at such Holder's option, to
require the Issuer to repurchase all of such Holder's Notes, or a portion
thereof which is a principal amount of $1,000 or any integral

                                       41
<PAGE>
multiple thereof, on the date (the "Change of Control Repurchase Date") that is
30 Change of Control Business Days after the date of the Change of Control at a
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest to the Change of Control Repurchase Date, all upon the terms and
subject to the conditions set forth in the Indenture.

      The Indenture includes a number of restrictive covenants affecting the
Issuer and certain of its subsidiaries. These restrictive covenants are subject
to a number of important qualifications and exceptions and reference is made to
the Indenture for a description thereof.

      The Issuer, the Trustee, and any agent of the Issuer or the Trustee, may
deem and treat the Holder hereof as the absolute owner of this Note (whether or
not this Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon), for the purpose of receiving payment of, or on account
of, the principal hereof and premium, if any, hereon and, subject to the
provisions in the Indenture, interest hereon and for all other purposes, and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.

      No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or in this Note or because of any indebtedness evidenced hereby
shall be had against any incorporator, as such, or against any past, present or
future shareholder, officer or director, as such, of the Issuer or of any
successor, either directly or through the Issuer or any successor, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly (to the extent permitted by law), waived and released
by the acceptance hereof and as part of the consideration for the issue hereof.

      Certain of the Issuer's obligations under this Note and under the
Indenture with respect to the Notes may be terminated if the Issuer irrevocably
deposits with the Trustee money or U.S. Government Obligations sufficient to pay
and discharge the entire indebtedness on all of the Notes, all upon the terms
and subject to the conditions set forth in the Indenture.

      This Note shall be governed by and construed in accordance with the laws
of the State of New York.

      Terms (whether or not capitalized) used in this Note and not defined
herein which are defined in the Indenture shall have the respective meanings
ascribed thereto in the Indenture.

                                       42
<PAGE>
                                  ABBREVIATIONS

      The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.

      TEN COM--as tenants in common

      TEN ENT--as tenants by the entireties

      JT TEN--as joint tenants with right of survivorship and not as tenants in
              common

      UNIF GIFT MIN ACT--                   Custodian
                         ----------------------------------------------
                              (Cust)                        (Minor)

      under Uniform Gifts to Minors Act
                                        -----------------------
                                                (State)

      Additional abbreviations may also be used though not in the above list.

                            ASSIGNMENT/TRANSFER FORM

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please Insert Social Security or Other Identifying Number of
Assignee)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

the within Note and all rights thereunder, hereby irrevocably constituting
and appointing

-----------------------------------------------------------------------------
attorney to transfer said Note on the books of the Issuer, with full power of
substitution in the premises.

Dated:
        ------------------------------------------------------------------------
        NOTICE:  The signature to this assignment must correspond with the name
        as written upon the face of the within instrument in every particular,
        without alteration or enlargement or any change whatever.

Signature Guaranteed:

-----------------------------------------
The signature should be guaranteed by a
commercial bank or a member broker of
either the New York Stock Exchange,
American Stock Exchange, Midwest Stock
Exchange or Pacific Coast Stock Exchange.

                                       43

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