Document:

<PAGE>
                                                                    EXHIBIT 4.16

                                                                  EXECUTION COPY

                                                                          [144A]

================================================================================

                D.R. HORTON, INC. AND THE GUARANTORS PARTY HERETO

                             Senior Debt Securities

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

                                    Indenture

                           Dated as of April 11, 2002

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

                AMERICAN STOCK TRANSFER & TRUST COMPANY, Trustee

================================================================================

<PAGE>

                              CROSS-REFERENCE TABLE

           This Cross-Reference Table is not a part of the Indenture.

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

<Table>
<Caption>
TIA                                                                                    Indenture
Section                                                                                 Section
<S>                                                                                     <C>
310(a)(1)...........................................................................  7.09; 7.10
   (a)(2)...........................................................................  7.10
   (a)(3)...........................................................................  N.A.
   (a)(4)...........................................................................  N.A.
   (a)(5)...........................................................................  N.A.
   (b)..............................................................................  7.08; 7.10; 11.02; 11.14
   (c)..............................................................................  N.A.
311(a)..............................................................................  7.11
   (b)..............................................................................  7.11
   (b)(1)...........................................................................  7.10
   (c)..............................................................................  N.A.
312(a)..............................................................................  2.05
   (b)..............................................................................  2.05; 11.03
   (c)..............................................................................  11.03
313(a)..............................................................................  7.06
   (b)(1)...........................................................................  N.A.
   (b)(2)...........................................................................  7.06
   (c)..............................................................................  N.A.
   (d)..............................................................................  7.06
314(a)..............................................................................  4.03; 7.06; 11.02
   (b)..............................................................................  N.A.
   (c)(1)...........................................................................  11.04
   (c)(2)...........................................................................  11.04
   (c)(3)...........................................................................  N.A.
   (d)..............................................................................  N.A.
   (e)..............................................................................  11.05
   (f)..............................................................................  N.A.
315(a)..............................................................................  7.01(b)
   (b)..............................................................................  7.05; 11.02
   (c)..............................................................................  7.01(a)
   (d)..............................................................................  7.01(c)
   (e)..............................................................................  6.11
</Table>

<PAGE>

<Table>
<S>                                                                                   <C>
316(a)(last sentence)...............................................................  11.06
   (a)(1)(A)........................................................................  6.05
   (a)(1)(B)........................................................................  6.04
   (a)(2)...........................................................................  N.A.
   (b)..............................................................................  6.07
317(a)(1)...........................................................................  6.08
   (a)(2)...........................................................................  6.09
   (b)..............................................................................  2.04
318(a)..............................................................................  11.01
   (b)..............................................................................  N.A.
   (c)..............................................................................  N.A.
</Table>

----------
N.A. means Not Applicable.

                                      -ii-
<PAGE>

                                TABLE OF CONTENTS

             This Table of Contents is not a part of the Indenture.

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

<Table>
<Caption>
                                                                                                        Page
<S>                                                                                                     <C>
                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions................................................................................1
Section 1.02. Other Definitions.........................................................................12
Section 1.03. Incorporation by Reference of Trust Indenture Act.........................................13
Section 1.04. Rules of Construction.....................................................................13

                                   ARTICLE TWO

                                 THE SECURITIES

Section 2.01. Form and Dating...........................................................................14
Section 2.02. Execution and Authentication..............................................................16
Section 2.03. Registrar and Paying Agent................................................................17
Section 2.04. Paying Agent to Hold Money in Trust.......................................................17
Section 2.05. Securityholder Lists......................................................................17
Section 2.06. Transfer and Exchange.....................................................................18
Section 2.07. Replacement Securities....................................................................18
Section 2.08. Outstanding Securities....................................................................18
Section 2.09. Temporary Securities......................................................................19
Section 2.10. Cancellation..............................................................................19
Section 2.11. Defaulted Interest........................................................................19
Section 2.12. Treasury Securities.......................................................................20
Section 2.13. CUSIP Numbers.............................................................................20
Section 2.14. Deposit of Moneys.........................................................................20
Section 2.15. Book-Entry Provisions for Global Security.................................................20
Section 2.16. Restrictive Legends.......................................................................22
Section 2.17. Special Transfer Provisions...............................................................23
</Table>

<PAGE>

<Table>
<S>                                                                                                    <C>
                                  ARTICLE THREE

                                   REDEMPTION

Section 3.01. Notices to Trustee........................................................................26
Section 3.02. Selection of Securities to be Redeemed....................................................26
Section 3.03. Notice of Redemption......................................................................27
Section 3.04. Effect of Notice of Redemption............................................................27
Section 3.05. Deposit of Redemption Price...............................................................27
Section 3.06. Securities Redeemed in Part...............................................................28

                                  ARTICLE FOUR

                                    COVENANTS

Section 4.01. Payment of Securities.....................................................................28
Section 4.02. Maintenance of Office or Agency...........................................................28
Section 4.03. Compliance Certificate....................................................................28
Section 4.04. Payment of Taxes; Maintenance of Corporate Existence; Maintenance of Properties...........28
Section 4.05. Additional Guarantors.....................................................................29
Section 4.06. Waiver of Stay, Extension or Usury Laws...................................................30

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

Section 5.01. When Company May Merge, etc...............................................................30

                                   ARTICLE SIX

                              DEFAULTS AND REMEDIES

Section 6.01. Events of Default.........................................................................31
Section 6.02. Acceleration..............................................................................33
Section 6.03. Other Remedies............................................................................34
Section 6.04. Waiver of Existing Defaults...............................................................34
Section 6.05. Control by Majority.......................................................................34
Section 6.06. Limitation on Suits.......................................................................34
Section 6.07. Rights of Holders to Receive Payment......................................................35
Section 6.08. Collection Suit by Trustee................................................................35
Section 6.09. Trustee May File Proofs of Claim..........................................................35
</Table>

                                      -ii-
<PAGE>

<Table>
<S>                                                                                                     <C>
Section 6.10. Priorities................................................................................36
Section 6.11. Undertaking for Costs.....................................................................36

                                  ARTICLE SEVEN

                                     TRUSTEE

Section 7.01. Duties of Trustee.........................................................................36
Section 7.02. Rights of Trustee.........................................................................38
Section 7.03. Individual Rights of Trustee..............................................................39
Section 7.04. Trustee's Disclaimer......................................................................39
Section 7.05. Notice of Defaults........................................................................39
Section 7.06. Reports by Trustee to Holders.............................................................39
Section 7.07. Compensation and Indemnity................................................................40
Section 7.08. Replacement of Trustee....................................................................40
Section 7.09. Successor Trustee by Merger, etc..........................................................41
Section 7.10. Eligibility; Disqualification.............................................................41
Section 7.11. Preferential Collection of Claims Against Company.........................................41

                                  ARTICLE EIGHT

                             DISCHARGE OF INDENTURE

Section 8.01. Defeasance upon Deposit of Moneys or U.S. Government Obligations..........................42
Section 8.02. Survival of the Company's Obligations.....................................................45
Section 8.03. Application of Trust Money................................................................45
Section 8.04. Repayment to the Company..................................................................45
Section 8.05. Reinstatement.............................................................................46

                                  ARTICLE NINE

                                   GUARANTEES

Section 9.01. Unconditional Guarantees..................................................................46
Section 9.02. Severability..............................................................................47
Section 9.03. Release of a Guarantor....................................................................47
Section 9.04. Limitation of a Guarantor's Liability.....................................................48
Section 9.05. Guarantors May Consolidate, etc., on Certain Terms........................................48
Section 9.06. Contribution..............................................................................48
Section 9.07. Waiver of Subrogation.....................................................................49
Section 9.08. Execution of Guarantee....................................................................49
</Table>

                                      -iii-
<PAGE>

<Table>
<S>                                                                                                     <C>
                                   ARTICLE TEN

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 10.01. Without Consent of Holders...............................................................50
Section 10.02. With Consent of Holders..................................................................51
Section 10.03. Compliance with Trust Indenture Act......................................................52
Section 10.04. Revocation and Effect of Consents........................................................52
Section 10.05. Notation on or Exchange of Securities....................................................53
Section 10.06. Trustee to Sign Amendments, etc..........................................................53

                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

Section 11.01. Trust Indenture Act Controls.............................................................53
Section 11.02. Notices..................................................................................53
Section 11.03. Communications by Holders with  Other Holders............................................54
Section 11.04. Certificate and Opinion as to  Conditions Precedent......................................55
Section 11.05. Statements Required in Certificate or Opinion............................................55
Section 11.06. Rules by Trustee and Agents..............................................................55
Section 11.07. Legal Holidays...........................................................................56
Section 11.08. Governing Law............................................................................56
Section 11.09. No Adverse Interpretation of Other Agreements............................................56
Section 11.10. No Recourse Against Others...............................................................56
Section 11.11. Successors and Assigns...................................................................56
Section 11.12. Duplicate Originals......................................................................56
Section 11.13. Severability.............................................................................57
Section 11.14. Ranking..................................................................................57

SIGNATURES............................................................................................ S-1

EXHIBIT A -  Form of Security
EXHIBIT B -  Form of Exchange Security
EXHIBIT C -  Form of Certificate to be Delivered in Connection with Transfers to Non-QIB Accredited
               Investors
EXHIBIT D -  Form of Certificate to be Delivered in Connection with Transfers
               Pursuant to Regulation S
</Table>

                                       iv
<PAGE>

                  INDENTURE dated as of April 11, 2002, by and among D.R.
HORTON, INC., a Delaware corporation (the "Company"), each of the Guarantors (as
defined in Section 1.01 below) and AMERICAN STOCK TRANSFER & TRUST COMPANY (the
"Trustee").

                  Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's debt
securities issued under this Indenture:

                                   ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions.

                  "Affiliate" means, when used with reference to a specified
person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.

                  "Agent" means any Registrar, Paying Agent or co-Registrar or
agent for service of notices and demands.

                  "Attributable Debt" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.

                  "Authorizing Resolution" means a resolution adopted by the
Board of Directors or by an Officer or committee of Officers pursuant to Board
delegation authorizing a Series of Securities.

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

                  "Board of Directors" means the Board of Directors of the
Company or any authorized committee thereof.

                  "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the applicable Issue Date, including, without
limitation, all Disqualified Stock and Preferred Stock.

                  "Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial

<PAGE>
                                      -2-

reporting purposes in accordance with GAAP, and the amount of such obligations
will be the capitalized amount thereof determined in accordance with GAAP.

                  "Change of Control Provisions" has the meaning set forth in
the definition of "Disqualified Stock" below.

                  "Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and thereafter means the
successor.

                  "Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against fluctuations
in currency values.

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

                  "Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Securities of the applicable Series or
(ii) is convertible into or exchangeable or exercisable for (whether at the
option of the issuer or the holder thereof) (a) debt securities or (b) any
Capital Stock referred to in (i) above, in each case, at any time prior to the
final maturity date of the Securities of the applicable Series; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof (or the holders of any security
into or for which such Capital Stock is convertible, exchangeable or
exercisable) the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control occurring prior to the
final maturity date of the Securities of the applicable Series shall not
constitute Disqualified Stock if the change in control provisions applicable to
such Capital Stock are no more favorable to such holders than any provisions
described in the Authorizing Resolution or supplemental indenture pertaining to
the Securities of the applicable Series ("Change of Control Provisions") and
such Capital Stock specifically provides that the Company will not repurchase or
redeem any such Capital Stock pursuant to such provisions prior to the Company's
repurchase of the Securities of the applicable Series to the extent required
pursuant to any such Change of Control Provisions.

                  "Exchange Securities" means the series B Securities to be
issued under this Indenture in exchange for the Initial Securities pursuant to a
Registration Rights Agreement.

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

<PAGE>
                                      -3-

Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States, as in effect on the date of this Indenture.

                  "Guarantee" means the guarantee of Securities of any
applicable Series by each Guarantor under this Indenture.

                  "Guarantors" means (i) initially on the execution of this
Indenture, each of:

                  Allegra, LLC, a California limited liability company;
                  AP LHI, Inc., a California corporation;
                  AP Western GP Corporation, a Delaware corporation;
                  AP WP Operating Corporation, a Delaware corporation;
                  AP WP Partners, L.P., a Delaware limited partnership;
                  APLAM, LLC, a California limited liability company;
                  C. Richard Dobson Builders, Inc., a Virginia corporation;
                  CH Investments of Texas, Inc., a Delaware corporation;
                  CHI Construction Company, an Arizona corporation;
                  CHTEX of Texas, Inc., a Delaware corporation;
                  Continental Homes of Florida, Inc., a Florida corporation;
                  Continental Homes of Texas, L.P., a Texas limited partnership;
                  Continental Homes, Inc., a Delaware corporation;
                  Continental Residential, Inc., a California corporation;
                  D.R. Horton - Emerald, Ltd., a Texas limited partnership;
                  D.R. Horton - Texas, Ltd., a Texas limited partnership;
                  D.R. Horton Los Angeles Holding Company, Inc., a
                    California corporation;
                  D.R. Horton Management Company, Ltd., a Texas limited
                    partnership;
                  D.R. Horton San Diego Holding Company, Inc., a California
                    corporation;
                  D.R. Horton, Inc. - Birmingham, an Alabama corporation;
                  D.R. Horton, Inc. - Chicago, a Delaware corporation;
                  D.R. Horton, Inc. - Denver, a Delaware corporation;
                  D.R. Horton, Inc. - Dietz-Crane, a Delaware corporation;
                  D.R. Horton, Inc. - Greensboro, a Delaware corporation;
                  D.R. Horton, Inc. - Jacksonville, a Delaware corporation;
                  D.R. Horton, Inc. - Louisville, a Delaware corporation;
                  D.R. Horton, Inc. - Minnesota, a Delaware corporation;
                  D.R. Horton, Inc. - New Jersey, a Delaware corporation;
                  D.R. Horton, Inc. - Portland, a Delaware corporation;
                  D.R. Horton, Inc. - Sacramento, a California corporation;
                  D.R. Horton, Inc. - Torrey, a Delaware corporation;

<PAGE>
                                      -4-

                  D.R. Horton-Schuler Homes, LLC, a Delaware limited liability
                    company;
                  DRH Cambridge Homes, Inc., a California corporation;
                  DRH Cambridge Homes, LLC, a Delaware limited liability
                    company;
                  DRH Construction, Inc., a Delaware corporation;
                  DRH Regrem II, Inc., a Delaware corporation;
                  DRH Regrem III, Inc., a Delaware corporation;
                  DRH Regrem IV, Inc., a Delaware corporation;
                  DRH Regrem V, Inc., a Delaware corporation;
                  DRH Regrem VII, LP, a Texas limited partnership;
                  DRH Regrem VIII, LLC, a Delaware limited liability company;
                  DRH Southwest Construction, Inc., a California corporation;
                  DRH Title Company of Colorado, Inc., a Colorado corporation;
                  DRH Tucson Construction, Inc., a Delaware corporation;
                  DRHI, Inc., a Delaware corporation;
                  HPH Homebuilders 2000 L.P., a California limited partnership;
                  KDB Homes, Inc., a Delaware corporation;
                  LAMCO Housing, Inc., a California corporation;
                  Meadows I, Ltd., a Delaware limited partnership;
                  Meadows II, Ltd., a Delaware limited partnership;
                  Meadows VIII, Ltd., a Delaware limited partnership;
                  Meadows IX, Inc., a New Jersey corporation;
                  Meadows X, Inc., a New Jersey corporation;
                  Melody Homes, Inc., a Delaware corporation;
                  Melmort Co., a Colorado corporation;
                  Porter GP LLC, a Delaware limited liability company;
                  Schuler Homes of Arizona LLC, a Delaware limited liability
                    company;
                  Schuler Homes of California, Inc., a California corporation;
                  Schuler Homes of Oregon, Inc., an Oregon corporation;
                  Schuler Homes of Washington, Inc., a Washington corporation;
                  Schuler Mortgage, Inc., a Delaware corporation;
                  Schuler Realty Hawaii, Inc., a Hawaii corporation;
                  Schuler Realty/Maui, Inc., a Hawaii corporation;
                  SGS Communities at Grande Quay, LLC, a New Jersey limited
                    liability company;
                  SHA Construction LLC, a Delaware limited liability company;
                  SHLR of California, Inc., a California corporation;
                  SHLR of Colorado, Inc., a Colorado corporation;
                  SHLR of Nevada, Inc., a Nevada corporation;
                  SHLR of Utah, Inc., a Utah corporation;
                  SHLR of Washington, Inc., a Washington corporation;
                  SRHI LLC, a Delaware limited liability company;

<PAGE>
                                      -5-

                  SSHI LLC, a Delaware limited liability company;
                  Vertical Construction Corporation, a Delaware corporation;
                  Western Pacific Funding, Inc., a California corporation;
                  Western Pacific Housing Co., a California corporation;
                  Western Pacific Housing Management, Inc., a California
                    corporation;
                  Western Pacific Housing, Inc., a Delaware corporation;
                  Western Pacific Housing-Antigua, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Aviara, L.P., a California limited
                    partnership;
                  Western Pacific Housing-Boardwalk, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Broadway, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Canyon Park, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Carmel, LLC, a Delaware limited
                  liability company; Western Pacific Housing-Carrillo, LLC, a
                  Delaware limited liability company; Western Pacific
                  Housing-Communications Hill, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Copper Canyon, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Creekside, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Culver City, L.P., a California
                    limited partnership;
                  Western Pacific Housing-Del Valle, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Lomas Verdes, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Lost Hills Park, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-McGonigle Canyon, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Mountaingate, L.P., a California
                    limited partnership;
                  Western Pacific Housing-Norco Estates, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Oso, L.P., a California limited
                    partnership;
                  Western Pacific Housing-Pacific Park II, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Park Avenue East, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Park Avenue West, LLC, a Delaware
                    limited liability company;

<PAGE>
                                      -6-

                  Western Pacific Housing-Playa Vista, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Poinsettia, L.P., a California limited
                    partnership;
                  Western Pacific Housing-River Ridge, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Robinhood Ridge, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Santa Fe, LLC, a Delaware limited
                  liability company; Western Pacific Housing-Scripps II, LLC, a
                  Delaware limited liability company;
                  Western Pacific Housing-Scripps, L.P., a California limited
                     partnership;
                  Western Pacific Housing-Seacove, L.P., a California limited
                     partnership;
                  Western Pacific Housing-Studio 528, LLC, a Delaware limited
                     liability company;
                  Western Pacific Housing-Terra Bay Duets, LLC, a Delaware
                  limited liability company; Western Pacific Housing-Torrance,
                  LLC, a Delaware limited liability company;
                  Western Pacific Housing-Torrey Commercial, LLC, a Delaware
                     limited liability company;
                  Western Pacific Housing-Torrey Meadows, LLC, a Delaware
                     limited liability company;
                  Western Pacific Housing-Torrey Multi-Family, LLC, a Delaware
                     limited liability company;
                  Western Pacific Housing-Torrey Village Center, LLC, a Delaware
                     limited liability company;
                  Western Pacific Housing-Vineyard Terrace, LLC, a Delaware
                     limited liability company;
                  Western Pacific Housing-Windemere, LLC, a Delaware limited
                     liability company;
                  Western Pacific Housing-Windflower, L.P., a California limited
                  partnership; WPH-Camino Ruiz, LLC, a Delaware limited
                  liability company; WPH-HPH, LLC, a Delaware limited liability
                  company;

and (ii) each of the Company's Subsidiaries which becomes a guarantor of
Securities pursuant to the provisions of this Indenture. An Unrestricted
Subsidiary may become a Guarantor if it (x) is so designated by resolution of
the Board of Directors of the Company and (y) executes a supplemental indenture
satisfactory to the Trustee.

<PAGE>
                                      -7-

                  "Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.

                  "Indebtedness" of any Person means, without duplication, (i)
any liability of such Person (a) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit issued for the benefit of or surety, performance,
completion or payment bonds, earnest money notes or similar purpose undertakings
or indemnifications issued by, such Person in the ordinary course of business),
(b) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than any obligation to pay a
contingent purchase price which, as of the date of incurrence thereof is not
required to be recorded as a liability in accordance with GAAP), or (c) in
respect of Capitalized Lease Obligations (to the extent of the Attributable Debt
in respect thereof), (ii) any Indebtedness of others that such Person has
guaranteed to the extent of the guarantee, (iii) to the extent not otherwise
included, the obligations of such Person under Currency Agreements or Interest
Protection Agreements to the extent recorded as liabilities not constituting
Interest Incurred, net of amounts recorded as assets in respect of such
agreements, in accordance with GAAP, and (iv) all Indebtedness of others secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, that Indebtedness shall not include accounts
payable, liabilities to trade creditors of such Person or other accrued expenses
arising in the ordinary course of business. The amount of Indebtedness of any
Person at any date shall be (a) the outstanding balance at such date of all
unconditional obligations as described above, net of any unamortized discount to
be accounted for as Interest Expense, in accordance with GAAP, (b) the maximum
liability of such Person for any contingent obligations under clause (ii) above
at such date, net of any unamortized discount to be accounted for as Interest
Expense in accordance with GAAP and (c) in the case of clause (iv) above, the
lesser of (1) the fair market value of any asset subject to a Lien securing the
Indebtedness of others on the date that the Lien attaches and (2) the amount of
the Indebtedness secured.

                  "Indenture" means this Indenture as amended or supplemented
from time to time, including pursuant to any Authorizing Resolution or
supplemental indenture pertaining to any Series.

                  "Initial Securities" means the series A Securities issued
under this Indenture.

                  "Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.

                  "interest" means, with respect to any Series of Securities,
the sum of any interest and any Liquidated Damages on such series of Securities.

<PAGE>
                                      -8-

                  "Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other noncash
interest expense other than interest and other charges amortized to cost of
sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of any
Indebtedness.

                  "Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect such
Person or any of its Subsidiaries against fluctuations in interest rates with
respect to Indebtedness permitted to be incurred under this Indenture.

                  "Investments" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person and (iv) all other items that would be classified as
investments in any other Person (including, without limitation, purchases of
assets outside the ordinary course of business) on a balance sheet of such
Person prepared in accordance with GAAP.

                  "Issue Date" means, with respect to any Series of Securities,
the date on which the Securities of such Series are originally issued under this
Indenture.

                  "Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.

                  "Liquidated Damages" has the meaning set forth in paragraph 7
of the Initial Security.

<PAGE>
                                      -9-

                  "Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness. Indebtedness which is otherwise
Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other Person for (i) environmental warranties and indemnities, or (ii)
indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.

                  "Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Controller or the Secretary of the Company.

                  "Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary
of the Company.

                  "Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.

                  "Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

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

                  "principal" of a debt security means the principal of the
security plus, when appropriate, the premium, if any, on the security.

                  "Private Placement Legend" means the legend set forth on the
Initial Securities in the form set forth in Section 2.16.

                  "Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.

<PAGE>
                                      -10-

                  "Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.

                  "Registration Rights Agreement" means, with respect to any
issuance of Initial Securities under this Indenture, the registration rights
agreement entered into among the Company, the Guarantors party thereto and the
initial purchasers of such Initial Securities.

                  "Regulation S" means Regulation S under the Securities Act.

                  "Restricted Security" has the meaning assigned to "Restricted
Security" in Rule 144(a)(3) under the Securities Act; provided, however, that
the Trustee shall be entitled to request and conclusively rely on an Opinion of
Counsel with respect to whether any Security constitutes a Restricted Security.

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

                  "Rule 144A" means Rule 144A under the Securities Act.

                  "SEC" means the Securities and Exchange Commission or any
successor agency performing the duties now assigned to it under the TIA.

                  "Securities" means the Initial Securities and the Exchange
Securities, treated as a single Series, issued under this Indenture.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Series" means a series of Securities established under this
Indenture.

                  "Significant Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" as defined in Rule 1.02 of
Regulation S-X under the Securities Act and the Exchange Act.

                  "Subsidiary" of any Person means any corporation or other
entity of which a majority of the Capital Stock having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.

                  "TIA" means the Trust Indenture Act of 1939, as in effect from
time to time.

                  "Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor serving hereunder.

<PAGE>
                                      -11-

                  "Trust Officer" means the Chairman of the Board, the
President, any Vice President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.

                  "United States" means the United States of America.

                  "U.S. government obligations" means securities which are (i)
direct obligations of the United States for the payment of which its full faith
and credit is pledged or (ii) obligations of a person controlled or supervised
by and acting as an agency or instrumentality of the United States the payment
of which is unconditionally guaranteed as a full faith and credit obligation by
the United States, which, in either case are not callable or redeemable at the
option of the issuer thereof, and shall also include a depositary receipt issued
by a bank or trust company as custodian with respect to any such U.S. government
obligations or a specific payment of interest on or principal of any such U.S.
government obligation held by such custodian for the account of the holder of a
depositary receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. government obligation or the specific payment of interest on or
principal of the U.S. government obligation evidenced by such depositary
receipt.

                  "Unrestricted Subsidiary" means any Subsidiary of the Company
so designated by a resolution adopted by the Board of Directors of the Company
as provided below; provided that (a) the holders of Indebtedness thereof do not
have direct or indirect recourse against the Company or any Restricted
Subsidiary, and neither the Company nor any Restricted Subsidiary otherwise has
liability, for any payment obligations in respect of such Indebtedness
(including any undertaking, agreement or instrument evidencing such
Indebtedness), except, (i) in each case, to the extent that the amount thereof
constitutes a "restricted payment" permitted to be made under any provisions set
forth limiting the making or paying of a "restricted payment" under the
Authorizing Resolution or supplemental indenture pertaining to an applicable
Series ("Restricted Payment Provisions"), (ii) in the case of Non-Recourse
Indebtedness, to the extent such recourse or liability is for the matters
discussed in the last sentence of the definition of "Non-Recourse Indebtedness,"
or (iii) to the extent such Indebtedness is a guarantee by such Subsidiary of
Indebtedness of the Company or a Restricted Subsidiary and (b) no holder of any
Indebtedness of such Subsidiary shall have a right to declare a default on such
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity as a result of a default on any Indebtedness of the Company
or any Restricted Subsidiary. Subject to the foregoing, the Board of Directors
of the Company may designate any Subsidiary to be an Unrestricted Subsidiary;
provided, however, that (i) the net amount (the "Designation Amount") then
outstanding of all previous Investments by the Company and the Restricted
Subsidiaries in such Subsidiary will be deemed to be a "restricted payment"
pursuant to any Restricted Payment Provisions at the time of such designation
and will reduce the amount

<PAGE>
                                      -12-

available for other restricted payments under any Restricted Payment Provisions,
to the extent provided therein, (ii) the Company must be permitted under any
Restricted Payment Provisions to make the "restricted payment" deemed to have
been made pursuant to clause (i), and (iii) after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. The Board of Directors of the Company may also redesignate an
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
(i) the Indebtedness of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred under any provisions set forth limiting the
incurrence of Indebtedness under the Authorizing Resolution or supplemental
indenture pertaining to an applicable Series ("Debt Limitation Provisions"),
(ii) immediately after giving effect to such redesignation and the incurrence of
any such additional Indebtedness, the Company and the Restricted Subsidiaries
could incur $1.00 of additional Indebtedness under any debt incurrence covenant
ratio set forth in any Debt Limitation Provisions and (iii) the Liens of such
Unrestricted Subsidiary as of the date of such redesignation could then be
incurred in accordance with any provisions set forth limiting the creation or
existence of Liens under the Authorizing Resolution or supplemental indenture
pertaining to an applicable Series ("Lien Limitation Provisions"). Any such
designation or redesignation by the Board of Directors of the Company will be
evidenced to the Trustee by the filing with the Trustee of a certified copy of
the resolution of the Board of Directors of the Company giving effect to such
designation or redesignation and an Officers' Certificate certifying that such
designation or redesignation complied with the foregoing conditions and setting
forth the underlying calculations of such Officers' Certificate. The designation
of any Person as an Unrestricted Subsidiary shall be deemed to include a
designation of all Subsidiaries of such Person as Unrestricted Subsidiaries;
provided, however, that the ownership of the general partnership interest (or a
similar member's interest in a limited liability company) by an Unrestricted
Subsidiary shall not cause a Subsidiary of the Company of which more than 95% of
the equity interest is held by the Company or one or more Restricted
Subsidiaries to be deemed an Unrestricted Subsidiary.

Section 1.02. Other Definitions.

<Table>
<Caption>
                                                                                                     Defined in
Term                                                                                                  Section
----                                                                                                 ----------
<S>                                                                                                  <C>
"Agent Members"................................................................................          2.15
"Business Day".................................................................................         11.07
"Custodian"....................................................................................          6.01
"Depository"...................................................................................          2.15
"Event of Default".............................................................................          6.01
"Global Securities"............................................................................          2.01(c)
"Legal Holiday"................................................................................         11.07
"Paying Agent".................................................................................          2.03
"Physical Securities"..........................................................................          2.01(c)
"Private Placement Legend".....................................................................          2.16
"Registrar"....................................................................................          2.03
</Table>

<PAGE>
                                      -13-

Section 1.03. Incorporation by Reference of Trust Indenture Act.

                  Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

                  "Commission" means the SEC.

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture trustee" or "institutional trustee" means the
Trustee.

                  "obligor" on the indenture securities means the Company, each
of the Guarantors, or any other obligor on the Securities of a Series or any
Guarantees thereof.

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

Section 1.04. Rules of Construction.

                  Unless the context otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;

                  (3) "or" is not exclusive;

                  (4) words in the singular include the plural, and in the
plural include the singular; and

                  (5) provisions apply to successive events and transactions.

<PAGE>
                                      -14-

                                   ARTICLE TWO

                                 THE SECURITIES

Section 2.01. Form and Dating.

                  (a) The aggregate principal amount of Securities that may be
issued under this Indenture is unlimited. The Securities may be issued from time
to time in one or more Series. Each Series shall be created by an Authorizing
Resolution or a supplemental indenture that establishes the terms of the Series,
which may include the following:

                  (1)      the title of the Series;

                  (2)      the aggregate principal amount (or any limit on the
                           aggregate principal amount) of the Series and, if any
                           Securities of a Series are to be issued at a discount
                           from their face amount, the method of computing the
                           accretion of such discount;

                  (3)      the interest rate or method of calculation of the
                           interest rate;

                  (4)      the date from which interest will accrue;

                  (5)      the record dates for interest payable on Securities
                           of the Series;

                  (6)      the dates when, places where and manner in which
                           principal and interest are payable;

                  (7)      the Registrar and Paying Agent;

                  (8)      the terms of any mandatory (including any sinking
                           fund requirements) or optional redemption by the
                           Company;

                  (9)      the terms of any redemption at the option of Holders;

                  (10)     the denominations in which Securities are issuable;

                  (11)     whether Securities will be issued in registered or
                           bearer form and the terms of any such forms of
                           Securities;

                  (12)     whether any Securities will be represented by a
                           Global Security and the terms of any such Global
                           Security;

<PAGE>
                                      -15-

                  (13)     the currency or currencies (including any composite
                           currency) in which principal or interest or both may
                           be paid;

                  (14)     if payments of principal or interest may be made in a
                           currency other than that in which Securities are
                           denominated, the manner for determining such
                           payments;

                  (15)     provisions for electronic issuance of Securities or
                           issuance of Securities in uncertificated form;

                  (16)     any Events of Default, covenants and/or defined terms
                           in addition to or in lieu of those set forth in this
                           Indenture;

                  (17)     whether and upon what terms Securities may be
                           defeased if different from the provisions set forth
                           in this Indenture;

                  (18)     the form of the Securities, which, unless the
                           Authorizing Resolution or supplemental indenture
                           otherwise provides, shall be in the form of Exhibit A
                           or Exhibit B;

                  (19)     any terms that may be required by or advisable under
                           applicable law;

                  (20)     the percentage of the principal amount of the
                           Securities which is payable if the maturity of the
                           Securities is accelerated in the case of Securities
                           issued at a discount from their face amount;

                  (21)     whether any Securities will not have Guarantees; and

                  (22)     any other terms in addition to or different from
                           those contained in this Indenture.

                  All Securities of one Series need not be issued at the same
time and, unless otherwise provided, a Series may be reopened for issuances of
additional Securities of such Series pursuant to an Authorizing Resolution, an
Officers' Certificate or in any indenture supplemental hereto.

                  The creation and issuance of a Series and the authentication
and delivery thereof are not subject to any conditions precedent.

                  (b) The Initial Securities and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit A
hereto. The Exchange Securities and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit B hereto. The
Securities may have notations, legends or endorsements required by

<PAGE>
                                      -16-

law, stock exchange rules, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. If required, the Securities may bear the appropriate legend
regarding any original issue discount for federal income tax purposes. Each
Security shall have an executed Guarantee from each of the Guarantors.

                  The terms and provisions contained in the Securities, annexed
hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

                  (c) Global Securities. The Securities offered and sold (1) in
reliance on Rule 144A, (2) in reliance on Regulation S and (3) to a limited
number of Institutional Accredited Investors in a transaction exempt from the
registration requirements of the Securities Act shall be issued initially in the
form of one or more permanent Global Securities ("Global Securities") in
definitive, fully registered form without interest coupons, in substantially the
form of Exhibit A, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Trustee, at the Trustee's office in New
York City, as custodian for the Depository, and registered in the name of the
Depository or a nominee of the Depository, duly executed by the Company (and
having an executed Guarantee in the manner set forth in Section 9.08) and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in Section 2.16. The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee in the limited
circumstances hereinafter provided.

                  Securities issued in exchange for interests in Global
Securities pursuant to Section 2.15 may be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibit A (the "Physical Securities").

Section 2.02. Execution and Authentication.

                  Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities. Each Guarantor shall execute the Guarantee in the manner set forth
in Section 9.08.

                  If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall nevertheless be valid.

                  A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.

<PAGE>
                                      -17-

                  The Trustee shall authenticate Securities for original issue
upon receipt of an Officers' Certificate of the Company. Each Security shall be
dated the date of its authentication.

Section 2.03. Registrar and Paying Agent.

                  The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for payment
("Paying Agent") and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.

                  The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such Agent
and the Trustee shall have the right to inspect the Securities register at all
reasonable times to obtain copies thereof, and the Trustee shall have the right
to rely upon such register as to the names and addresses of the Holders and the
principal amounts and certificate numbers thereof. If the Company fails to
maintain a Registrar or Paying Agent or fails to give the foregoing notice, the
Trustee shall act as such.

                  The Company initially appoints the Trustee as Registrar and
Paying Agent.

Section 2.04. Paying Agent to Hold Money in Trust.

                  Each Paying Agent shall hold in trust for the benefit of
Securityholders and the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon doing so the Paying Agent shall
have no further liability for the money.

Section 2.05. Securityholder Lists.

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least 5 Business Days before each semiannual
interest payment date and at such other times as the Trustee may request in

<PAGE>
                                      -18-

writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.

Section 2.06. Transfer and Exchange.

                  Where a Security is presented to the Registrar or a
co-Registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the New
York Uniform Commercial Code are met. Where Securities are presented to the
Registrar or a co-Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit transfers
and exchanges, the Trustee shall authenticate Securities at the Registrar's
request. The Registrar need not transfer or exchange any Security selected for
redemption, except the unredeemed part thereof if the Security is redeemed in
part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed. Any exchange or transfer shall be
without charge, except that the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto except in the case of exchanges pursuant to 2.09, 3.06, or 10.05 not
involving any transfer.

Section 2.07. Replacement Securities.

                  If the Holder of a Security claims that the Security has been
lost, destroyed, mutilated or wrongfully taken, the Company shall issue and,
upon written request of any Officer of the Company, the Trustee shall
authenticate a replacement Security, provided in the case of a lost, destroyed
or wrongfully taken Security, that the requirements of Section 8-405 of the New
York Uniform Commercial Code are met. If any such lost, destroyed, mutilated or
wrongfully taken Security shall have matured or shall be about to mature, the
Company may, instead of issuing a substitute Security therefor, pay such
Security without requiring (except in the case of a mutilated Security) the
surrender thereof. An indemnity bond must be sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced, including the
acquisition of such Security by a bona fide purchaser. The Company or the
Trustee may charge for its expenses in replacing a Security.

Section 2.08. Outstanding Securities.

                  Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it and those
described in this Section. A Security does not cease to be outstanding because
the Company, any Guarantor or one of their Affiliates holds the Security.

<PAGE>
                                      -19-

                  If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

                  If the Paying Agent holds on a redemption date or maturity
date money sufficient to pay Securities payable on that date, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.

                  Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

Section 2.09. Temporary Securities.

                  Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and, upon
surrender for cancellation of the temporary Security, the Company and the
Guarantors shall execute and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities authenticated and delivered
hereunder.

Section 2.10. Cancellation.

                  The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange,
redemption or payment. The Trustee and no one else shall cancel and destroy, or
retain in accordance with its standard retention policy, all Securities
surrendered for registration or transfer, exchange, redemption, paying or
cancellation. Unless the Authorizing Resolution so provides, the Company may not
issue new Securities to replace Securities that it has previously paid or
delivered to the Trustee for cancellation.

Section 2.11. Defaulted Interest.

                  If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest plus any interest payable on the
defaulted interest to the persons who are Securityholders on a subsequent
special record date. The Company shall fix such special record date and a
payment date which shall be reasonably satisfactory to the Trustee. At least 15
days before such special record date, the Company shall mail to each
Securityholder a notice

<PAGE>
                                      -20-

that states the record date, the payment date and the amount of defaulted
interest to be paid. On or before the date such notice is mailed, the Company
shall deposit with the Paying Agent money sufficient to pay the amount of
defaulted interest to be so paid. The Company may pay defaulted interest in any
other lawful manner if, after notice given by the Company to the Trustee of the
proposed payment, such manner of payment shall be deemed practicable by the
Trustee.

Section 2.12. Treasury Securities.

                  In determining whether the Holders of the required principal
amount of Securities of a Series have concurred in any direction, waiver,
consent or notice, Securities owned by the Company, the Guarantors or any of
their respective Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so considered.

Section 2.13. CUSIP Numbers.

                  The Company in issuing the Securities of any Series may use a
"CUSIP" number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such Securities; provided
that no representation is hereby deemed to be made by the Trustee as to the
correctness or accuracy of any such CUSIP number printed in the notice or on
such Securities, and that reliance may be placed only on the other
identification numbers printed on such Securities. The Company shall promptly
notify the Trustee of any change in any CUSIP number.

Section 2.14. Deposit of Moneys.

                  Prior to 11:00 a.m. New York City time on each interest
payment date and maturity date with respect to each Series of Securities, the
Company shall have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments due on such interest payment date
or maturity date, as the case may be, in a timely manner which permits the
Paying Agent to remit payment to the Holders on such interest payment date or
maturity date, as the case may be.

Section 2.15. Book-Entry Provisions for Global Security.

                  (a) Any Global Security of a Series initially shall (i) be
registered in the name of the depository who shall be identified in the
Authorizing Resolution or supplemental indenture relating to such Securities
(the "Depository") or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear any required legends.

<PAGE>
                                      -21-

                  Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.

                  (b) Transfers of any Global Security shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Security may
be transferred or exchanged for definitive Securities in accordance with the
rules and procedures of the Depository. In addition, definitive Securities shall
be transferred to all beneficial owners in exchange for their beneficial
interests in a Global Security if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for the Global Security and
a successor depository is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue definitive
Securities.

                  (c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Security to beneficial owners pursuant
to paragraph (b), the Registrar shall (if one or more definitive Securities are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company and the Guarantors shall execute, and the Trustee shall authenticate
and deliver, one or more definitive Securities of like tenor and amount.

                  (d) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to paragraph (b), the Global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company and the Guarantors shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depository in exchange for
its beneficial interest in the Global Security, an equal aggregate principal
amount of definitive Securities of authorized denominations.

                  (e) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities of such Series.

<PAGE>
                                      -22-

                  (f) Each Global Security shall also bear the following legend
on the face thereof:

                  Unless and until it is exchanged in whole or in part for
         securities in definitive form, this security may not be transferred
         except as a whole by the depository to a nominee of the depository, or
         by any such nominee of the depository, or by the depository or nominee
         of such successor depository or any such nominee to a successor
         depository or a nominee of such successor depository. Unless this
         certificate is presented by an authorized representative of The
         Depository Trust Company, a New York corporation ("DTC"), to an issuer
         or its agent for registration of transfer, exchange or payment, and any
         certificate issued is registered in the name of Cede & Co. or such
         other name as is requested by an authorized representative of DTC (and
         any payment hereon 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.

                  Transfers of this global security shall be limited to
         transfers in whole, but not in part, to nominees of Cede & Co. or to a
         successor thereof or such successor's nominee and transfers of portions
         of this global security shall be limited to transfers made in
         accordance with the restrictions set forth in Section 2.17 of the
         Indenture referred to herein.

Section 2.16. Restrictive Legends.

                  Restrictive Legends. Each Global Security and Physical
Security that constitutes a Restricted Security or is sold in compliance with
Regulation S shall bear the following legend (the "Private Placement Legend") on
the face thereof until after the second anniversary of the later of the Issue
Date and the last date on which the Company or any Affiliate was the owner of
such Security (or any predecessor note) (or such shorter period of time as
permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder), or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the opinion of counsel for
the Company, unless otherwise agreed by the Company and the Holder thereof:

                  This security has not been registered under the Securities Act
         of 1933, as amended (the "Securities Act"), and neither this security
         nor any interest or participation herein (or therein) may be offered,
         sold, assigned, transferred, pledged, encumbered or otherwise disposed
         of in the absence of such registration or unless such transaction is
         exempt from, or not subject to, the registration requirements of the
         Securities Act or any applicable state securities laws. The

<PAGE>
                                      -23-

         holder hereof, by its acceptance of this security, agrees for the
         benefit of the issuer that this security may not be offered, sold,
         pledged or otherwise transferred prior to the expiration of the holding
         period under Rule 144(k) under the Securities Act which is applicable
         to this security (the "Resale Restriction Termination Date") other than
         (1) to either issuer or its subsidiaries, (2) so long as this security
         is eligible for resale pursuant to Rule 144A under the Securities Act
         ("Rule 144A"), to a person who the seller reasonably believes is a
         "qualified institutional buyer" within the meaning of Rule 144A
         purchasing for its own account or for the account of a qualified
         institutional buyer, in each case to whom notice is given that the
         resale, pledge or other transfer is being made in reliance on Rule 144A
         (as indicated by the box checked by the transferor on the certificate
         of transfer on the reverse of this security if this security is not in
         book-entry form), (3) to a non-"U.S. person" in an "offshore
         transaction" (as such terms are defined in Regulation S under the
         Securities Act) in accordance with Regulation S under the Securities
         Act (as indicated by the box checked by the transferor on the
         certificate of transfer on the reverse of this security if this
         security is not in book-entry form), (4) to an institutional
         "accredited investor" (as defined in Rule 501 (a)(1), (2), (3) or (7)
         of the Securities Act (an "Institutional Accredited Investor")) that,
         prior to such transfer, furnishes the trustee for the securities a
         signed letter containing certain representations and agreements (the
         form of which can be obtained from the trustee), (5) pursuant to any
         other available exemption from, or transaction not subject to, the
         registration requirements of the Securities Act, including the
         exemption provided by Rule 144 under the Securities Act, if available,
         or (6) pursuant to an effective registration statement under the
         Securities Act, subject in each of the foregoing cases to any
         requirement of law that the disposition of its property or the property
         of such investor account or accounts be at all times within its or
         their control, and subject to the right of the issuer or the Trustee
         for the securities prior to any such sale, pledge or other transfer
         pursuant to clause (4) or (5) above to require the delivery of an
         opinion of counsel, certifications and/or other information
         satisfactory to each of them. This legend will be removed upon request
         of the holder on or after the Resale Restriction Termination Date.

Section 2.17. Special Transfer Provisions.

                  (a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:

<PAGE>
                                      -24-

                    (i) the Registrar shall register the transfer of any
         Security constituting a Restricted Security whether or not such
         Security bears the Private Placement Legend, if (x) the requested
         transfer is after the second anniversary of the Issue Date (provided,
         however, that neither the Company nor any Affiliate of the Company has
         held any beneficial interest in such Security, or portion thereof, at
         any time on or prior to the second anniversary of the Issue Date) or
         (y) (1) in the case of a transfer to an Institutional Accredited
         Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
         transferee has delivered to the Registrar a certificate substantially
         in the form of Exhibit C hereto and any legal opinions and
         certifications required thereby or (2) in the case of a transfer to a
         Non-U.S. Person, the proposed transferor has delivered to the Registrar
         a certificate substantially in the form of Exhibit D hereto; and

                   (ii) if the proposed transferor is an Agent Member holding a
         beneficial interest in the Global Security, upon receipt by the
         Registrar of (x) the certificate, if any, required by paragraph (i)
         above and (y) written instructions given in accordance with the
         Depository's and the Registrar's procedures,

whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of such Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and (b) the Company shall execute, the Guarantors shall execute the
Guarantee on, and the Trustee shall authenticate and deliver, one or more
Physical Securities of like tenor and amount.

                  (b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Security
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):

                    (i) the Registrar shall register the transfer if such
         transfer is being made by a proposed transferor who has checked the box
         provided for on the form of Security stating, or has otherwise advised
         the Company and the Registrar in writing, that the sale has been made
         in compliance with the provisions of Rule 144A to a transferee who has
         signed the certification provided for on the form of Security stating,
         or has otherwise advised the Company and the Registrar in writing, that
         it is purchasing the Security for its own account or an account with
         respect to which it exercises sole investment discretion and that it
         and any such account is a QIB within the meaning of Rule 144A, and is
         aware that the sale to it is being made in reliance on Rule 144A and
         acknowledges that it has received such information regarding the
         Company as it has requested pursuant to Rule 144A or has determined not
         to request such information and that it is aware that the transferor is
         relying upon its foregoing representations in order to claim the
         exemption from registration provided by Rule 144A; and

<PAGE>
                                      -25-

                   (ii) if the proposed transferee is an Agent Member, and the
         Securities to be transferred consist of Physical Securities which after
         transfer are to be evidenced by an interest in a Global Security, upon
         receipt by the Registrar of written instructions given in accordance
         with the Depository's and the Registrar's procedures, the Registrar
         shall reflect on its books and records the date and an increase in the
         principal amount of such Global Security in an amount equal to the
         principal amount of the Physical Securities to be transferred, and the
         Trustee shall cancel the Physical Securities so transferred.

                  (c) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither the
Company nor any Affiliate of the Company has held any beneficial interest in
such Security, or portion thereof, at any time prior to or on the second
anniversary of the Issue Date), or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.

                  (d) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.

                  The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.06 or this Section
2.17. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time during
the Registrar's normal business hours upon the giving of reasonable written
notice to the Registrar.

                  (e) Transfers of Securities Held by Affiliates. Any
certificate (i) evidencing a Security that has been transferred to an Affiliate
of the Company within two years after the Issue Date, as evidenced by a notation
on the Assignment Form for such transfer or in the representation letter
delivered in respect thereof or (ii) evidencing a Security that has been
acquired from an Affiliate (other than by an Affiliate) in a transaction or a
chain of transactions not involving any public offering, shall, until two years
after the last date on which either the Company or any Affiliate of the Company
was an owner of such Security, in each case, bear a legend in substantially the
form set forth in Section 2.16, unless otherwise agreed by the Company (with
written notice thereof to the Trustee).

<PAGE>
                                      -26-

                                  ARTICLE THREE

                                   REDEMPTION

Section 3.01. Notices to Trustee.

                  Securities of a Series that are redeemable prior to maturity
shall be redeemable in accordance with their terms and, unless the Authorizing
Resolution or supplemental indenture provides otherwise, in accordance with this
Article.

                  If the Company wants to redeem Securities pursuant to
Paragraph 5 of the Securities, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed. Any such
notice may be cancelled at any time prior to notice of such redemption being
mailed to Holders. Any such cancelled notice shall be void and of no effect.

                  If the Company wants to credit any Securities previously
redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of
the Securities, it shall notify the Trustee of the amount of the credit and it
shall deliver any Securities not previously delivered to the Trustee for
cancellation with such notice.

                  The Company shall give each notice provided for in this
Section 3.01 at least 30 days before the notice of any such redemption is to be
mailed to Holders (unless a shorter notice shall be satisfactory to the
Trustee).

Section 3.02. Selection of Securities to be Redeemed.

                  If fewer than all of the Securities of a Series are to be
redeemed, the Trustee shall select the Securities to be redeemed by a method the
Trustee considers fair and appropriate. The Trustee shall make the selection
from Securities outstanding not previously called for redemption and shall
promptly notify the Company of the serial numbers or other identifying
attributes of the Securities so selected. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than the
minimum denomination for the Series. Securities and portions of them it selects
shall be in amounts equal to the minimum denomination for the Series or an
integral multiple thereof. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.

<PAGE>
                                      -27-

Section 3.03. Notice of Redemption.

                  At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.

                  The notice shall identify the Securities to be redeemed and
shall state:

                  (1) the redemption date;

                  (2) the redemption price;

                  (3) the name and address of the Paying Agent;

                  (4) that Securities called for redemption must be surrendered
         to the Paying Agent to collect the redemption price;

                  (5) that interest on Securities called for redemption ceases
         to accrue on and after the redemption date; and

                  (6) that the Securities are being redeemed pursuant to the
         mandatory redemption or the optional redemption provisions, as
         applicable.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee at least 15 days prior to the date on which
notice of redemption is to be mailed or such shorter period as may be
satisfactory to the Trustee, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.

Section 3.04. Effect of Notice of Redemption.

                  Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption
price as set forth in the notice of redemption. Upon surrender to the Paying
Agent, such Securities shall be paid at the redemption price, plus accrued
interest to the redemption date.

Section 3.05. Deposit of Redemption Price.

                  On or before the redemption date, the Company shall deposit
with the Paying Agent immediately available funds sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date.

<PAGE>
                                      -28-

Section 3.06. Securities Redeemed in Part.

                  Upon surrender of a Security that is redeemed in part, the
Company and the Guarantors shall execute and the Trustee shall authenticate for
each Holder a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.

                                  ARTICLE FOUR

                                    COVENANTS

Section 4.01. Payment of Securities.

                  The Company shall pay the principal of and interest on a
Series on the dates and in the manner provided in the Securities of the Series.
An installment of principal or interest shall be considered paid on the date it
is due if the Paying Agent holds on that date money designated for and
sufficient to pay the installment.

                  The Company shall pay interest on overdue principal at the
rate borne by the Series; it shall pay interest on overdue installments of
interest at the same rate.

Section 4.02. Maintenance of Office or Agency.

                  The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee.

Section 4.03. Compliance Certificate.

                  The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers' Certificate stating
whether or not the signers know of any Default by the Company in performing any
of its obligations under this Indenture. If they do know of such a Default, the
certificate shall describe the Default.

Section 4.04. Payment of Taxes; Maintenance of Corporate Existence; Maintenance
of Properties.

                  The Company will:

                  (a) cause to be paid and discharged all lawful taxes,
         assessments and governmental charges or levies imposed upon the Company
         and its Restricted Subsidiaries

<PAGE>
                                      -29-

         or upon the income or profits of the Company and its Restricted
         Subsidiaries or upon property or any part thereof belonging to the
         Company and its Restricted Subsidiaries before the same shall be in
         default, as well as all lawful claims for labor, materials and supplies
         which, if unpaid, might become a lien or charge upon such property or
         any part thereof; provided, however, that the Company shall not be
         required to cause to be paid or discharged any such tax, assessment,
         charge, levy or claim so long as the validity or amount thereof shall
         be contested in good faith by appropriate proceedings and the
         nonpayment thereof does not, in the judgment of the Company, materially
         adversely affect the ability of the Company and the Restricted
         Subsidiaries to pay all obligations under this Indenture when due; and
         provided further that the Company shall not be required to cause to be
         paid or discharged any such tax, assessment, charge, levy or claim if,
         in the judgment of the Company, such payment shall not be advantageous
         to the Company in the conduct of its business and if the failure so to
         pay or discharge does not, in its judgment, materially adversely affect
         the ability of the Company and the Restricted Subsidiaries to pay all
         obligations under this Indenture when due;

                  (b) cause to be done all things necessary to preserve and keep
         in full force and effect the corporate existence of the Company and
         each of its Restricted Subsidiaries and to comply with all applicable
         laws; provided, however, that nothing in this subsection (b) shall
         prevent a consolidation or merger of the Company or any Restricted
         Subsidiary not prohibited by the provisions of Article Five, Article
         Nine or any other provision or the Authorizing Resolution or
         supplemental indenture pertaining to a Series, and the Company need not
         maintain the corporate existence of an immaterial Restricted Subsidiary
         which is not a Guarantor; and

                  (c) at all times keep, maintain and preserve all the property
         of the Company and the Restricted Subsidiaries in good repair, working
         order and condition (reasonable wear and tear excepted) and from time
         to time make all needful and proper repairs, renewals, replacements,
         betterments and improvements thereto, so that the business carried on
         in connection therewith may be properly and advantageously conducted at
         all times; provided, however, that nothing in this subsection (c) shall
         prevent the Company from discontinuing the operation and maintenance of
         any such properties if such discontinuance is, in the judgment of the
         Company, desirable in the conduct of its business and not
         disadvantageous in any material respect to the ability of the Company
         and the Restricted Subsidiaries to pay all obligations under this
         Indenture when due.

Section 4.05. Additional Guarantors.

                  If the Company or any of the Guarantors transfers or causes to
be transferred, in one transaction or a series of related transactions, any
property to any Restricted Subsidiary of the Company that is not a Guarantor, or
if the Company or any of the Guarantors shall organize,

<PAGE>
                                      -30-

acquire or otherwise invest in another Subsidiary which becomes a Restricted
Subsidiary, then such transferee or acquired or other Subsidiary shall (i)
execute and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Securities
of any Series that has the benefit of Guarantees of other Subsidiaries of the
Company and this Indenture (as it relates to all such Series) on the terms set
forth in this Indenture and (ii) deliver to the Trustee an Opinion of Counsel
that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and constitutes a legal, valid, binding and
enforceable obligation of such Subsidiary. Thereafter, such Subsidiary shall be
a Guarantor for all purposes of this Indenture (as it relates to all such
Series).

Section 4.06. Waiver of Stay, Extension or Usury Laws.

                  The Company and the Guarantors covenant (to the extent that
they may lawfully do so) that they 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 that would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of or
interest on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that may lawfully do so) the
Company and the Guarantors hereby expressly waive all benefit or advantage of
any such law, and covenant that they will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.

                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

Section 5.01. When Company May Merge, etc.

                  The Company shall not consolidate with or merge with or into,
any other corporation, or transfer all or substantially all of its assets to,
any entity unless permitted by law and unless (1) the resulting, surviving or
transferee entity, which shall be a corporation organized and existing under the
laws of the United States or a State thereof, assumes by supplemental indenture,
in a form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture and (2) immediately after giving
effect to, and as a result of, such transaction, no Default or Event of Default
shall have occurred and be continuing. Thereafter such successor corporation or
corporations shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the "Company" and all such obligations
of the predecessor corporation shall terminate.

<PAGE>
                                      -31-

                  The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Indenture.

                  To the extent that an Authorizing Resolution or supplemental
indenture pertaining to any Series provides for different provisions relating to
the subject matter of this Article Five, the provisions in such Authorizing
Resolution or supplemental indenture shall govern for purposes of such Series.

                                   ARTICLE SIX

                              DEFAULTS AND REMEDIES

Section 6.01. Events of Default.

                  An "Event of Default" on a Series occurs if, voluntarily or
involuntarily, whether by operation of law or otherwise, any of the following
occurs:

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

                    (2) the failure by the Company to pay the principal or
         premium of any Security of such Series when the same becomes due and
         payable at maturity, upon acceleration or otherwise;

                    (3) the failure by the Company or any Restricted Subsidiary
         to comply with any of its agreements or covenants in, or provisions of,
         the Securities of such Series, the Guarantees (as they relate thereto)
         or this Indenture (as they relate thereto) and such failure continues
         for the period and after the notice specified below (except in the case
         of a default with respect to any Change of Control Provisions or
         Article Five (or any replacement provisions as contemplated by Article
         Five), which will constitute Events of Default with notice but without
         passage of time);

                    (4) the acceleration of any Indebtedness (other than
         Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary
         in an amount of $20 million or more, individually or in the aggregate,
         and such acceleration does not cease to exist, or such Indebtedness is
         not satisfied, in either case within five days after such acceleration;

                    (5) the failure by the Company or any Restricted Subsidiary
         to make any principal or interest payment in an amount of $20 million
         or more, individually or in the

<PAGE>
                                      -32-

         aggregate, in respect of Indebtedness (other than Non-Recourse
         Indebtedness) of the Company or any Restricted Subsidiary within five
         days of such principal or interest becoming due and payable (after
         giving effect to any applicable grace period set forth in the documents
         governing such Indebtedness);

                    (6) a final judgment or judgments in an amount of $20
         million or more, individually or in the aggregate, for the payment of
         money having been entered by a court or courts of competent
         jurisdiction against the Company or any of its Restricted Subsidiaries
         and such judgment or judgments is not satisfied, stayed, annulled or
         rescinded within 60 days of being entered;

                    (7) the Company or any Restricted Subsidiary that is a
         Significant Subsidiary pursuant to or within the meaning of any
         Bankruptcy Law:

                           (A) commences a voluntary case,

                           (B) consents to the entry of an order for relief
                  against it in an involuntary case,

                           (C) consents to the appointment of a Custodian of it
                  or for all or substantially all of its property, or

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

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

                           (A) is for relief against the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary as
                  debtor in an involuntary case,

                           (B) appoints a Custodian of the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary or a
                  Custodian for all or substantially all of the property of the
                  Company or any Restricted Subsidiary that is a Significant
                  Subsidiary, or

                           (C) orders the liquidation of the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary,

         and the order or decree remains unstayed and in effect for 60 days; or

                  (9) any Guarantee of a Guarantor which is a Significant
         Subsidiary ceases to be in full force and effect (other than in
         accordance with the terms of such Guarantee and the Indenture) or is
         declared null and void and unenforceable or found to be invalid

<PAGE>
                                      -33-

         or any Guarantor denies its liability under its Guarantee (other than
         by reason of release of a Guarantor from its Guarantee in accordance
         with the terms of the Indenture and the Guarantee).

                  A Default as described in sub-clause (3) above will not be
deemed an Event of Default until the Trustee notifies the Company, or the
Holders of at least 25 percent in principal amount of the then outstanding
Securities of the applicable Series notify the Company and the Trustee, of the
Default and (except in the case of a default with respect to any Change of
Control Provisions or Article Five (or any replacement provisions as
contemplated by Article Five)) the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
a Default is cured within such time period, it ceases.

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

Section 6.02. Acceleration.

                  If an Event of Default (other than an Event of Default with
respect to the Company resulting from sub-clauses (7) or (8) above), shall have
occurred and be continuing under the Indenture, the Trustee by notice to the
Company, or the Holders of at least 25 percent in principal amount of the
Securities of the applicable Series then outstanding by notice to the Company
and the Trustee, may declare all Securities of such Series to be due and payable
immediately. Upon such declaration of acceleration, the amounts due and payable
on the Securities of such Series will be due and payable immediately. If an
Event of Default with respect to the Company specified in sub-clauses (7) or (8)
above occurs, all amounts due and payable on the Securities of such Series will
ipso facto become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee and the Company or any Holder.
The Holders of a majority in principal amount of the Securities of such Series
then outstanding by written notice to the Trustee and the Company may waive any
Default or Event of Default (other than any Default or Event of Default in
payment of principal or interest) with respect to such Series of Securities
under the Indenture. Holders of a majority in principal amount of the then
outstanding Securities of such Series may rescind an acceleration with respect
to such Series and its consequence (except an acceleration due to nonpayment of
principal or interest on the Securities of such Series) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived.

                  No such rescission shall extend to or shall affect any
subsequent Event of Default, or shall impair any right or power consequent
thereon.

<PAGE>
                                      -34-

Section 6.03. Other Remedies.

                  If an Event of Default on a Series occurs and is continuing,
the Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of or interest on the Series or to enforce the
performance of any provision in the Securities or this Indenture applicable to
the Series.

                  The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.

Section 6.04. Waiver of Existing Defaults.

                  Subject to Section 10.02, the Holders of a majority in
principal amount of the outstanding Securities of a Series on behalf of all the
Holders of the Series by notice to the Trustee may waive an existing Default on
such Series and its consequences. When a Default is waived, it is cured and
stops continuing, and any Event of Default arising therefrom shall be deemed to
have been cured; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.

Section 6.05. Control by Majority.

                  The Holders of a majority in principal amount of the
outstanding Securities of a Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it with respect to such Series. The Trustee,
however, may refuse to follow any direction (i) that conflicts with law or this
Indenture, (ii) that, subject to Section 7.01, the Trustee determines is unduly
prejudicial to the rights of other Securityholders, or (iii) that would involve
the Trustee in personal liability.

Section 6.06. Limitation on Suits.

                  A Securityholder of a Series may not pursue any remedy with
respect to this Indenture or the Series unless:

                  (1) the Holder gives to the Trustee written notice of a
         continuing Event of Default on the Series;

                  (2) the Holders of at least a majority in principal amount of
         the outstanding Securities of the Series make a written request to the
         Trustee to pursue the remedy;

<PAGE>
                                      -35-

                  (3) such Holder or Holders offer to the Trustee indemnity
         satisfactory to the Trustee against any loss, liability or expense;

                  (4) the Trustee does not comply with the request within 60
         days after receipt of the request and the offer of indemnity; and

                  (5) no written request inconsistent with such written request
         shall have been given to the Trustee pursuant to this Section 6.06.

                  A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.

Section 6.07. Rights of Holders to Receive Payment.

                  Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.

Section 6.08. Collection Suit by Trustee.

                  If an Event of Default in payment of interest or principal
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest remaining unpaid.

Section 6.09. Trustee May File Proofs of Claim.

                  The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company, its
creditors or its property, and unless prohibited by applicable law or
regulation, may vote on behalf of the Holders in any election of a Custodian,
and shall be entitled and empowered to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same
and any Custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee. Nothing herein shall be
deemed to authorize the Trustee to authorize or consent to or vote for or accept
or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder or to authorize the Trustee

<PAGE>
                                      -36-

to vote in respect of the claim of any Securityholder except as aforesaid for
the election of the Custodian.

Section 6.10. Priorities.

                  If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:

                  First: to the Trustee for amounts due under Section 7.07;

                  Second: to Securityholders of the Series for amounts due and
         unpaid on the Series for principal and interest, ratably, without
         preference or priority of any kind, according to the amounts due and
         payable on the Series for principal and interest, respectively; and

                  Third: to the Company or the Guarantors as their interests may
         appear.

                  The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.

Section 6.11. Undertaking for Costs.

                  In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having the
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Series.

                                  ARTICLE SEVEN

                                     TRUSTEE

Section 7.01. Duties of Trustee.

                  (a) If an Event of Default has occurred and is continuing, the
Trustee shall, prior to the receipt of directions from the Holders of a majority
in principal amount of the Securities, exercise its rights and powers and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

<PAGE>
                                      -37-

                  (b) Except during the continuance of an Event of Default:

                  (1) The Trustee need perform only those duties that are
         specifically set forth in this Indenture and no others and no implied
         covenants or obligations shall be read into this Indenture against the
         Trustee.

                  (2) In the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. The Trustee, however, shall examine the certificates
         and opinions to determine whether or not they conform to the
         requirements of this Indenture but need not confirm or investigate the
         accuracy of mathematical calculations or other facts or matters stated
         therein.

                  (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (1) This paragraph does not limit the effect of paragraph (b)
         of this Section.

                  (2) The Trustee shall not be liable for any error of judgment
         made in good faith by a Trust Officer, unless it is proved that the
         Trustee was negligent in ascertaining the pertinent facts.

                  (3) The Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance with a direction
         received by it pursuant to Section 6.05 or any other direction of the
         Holders permitted hereunder.

                  (d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                  (e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.

                  (f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

                  (g) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing that
the repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.

<PAGE>
                                      -38-

Section 7.02. Rights of Trustee.

                  Subject to Section 7.01:

                  (a) The Trustee may rely and shall be protected in acting or
refraining from acting on any document, resolution, certificate, instrument,
report, or direction believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document, resolution, certificate, instrument, report, or
direction.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both, which shall
conform to Sections 11.04 and 11.05 hereof and containing such other statements
as the Trustee reasonably deems necessary to perform its duties hereunder. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officers' Certificate, Opinion of Counsel or any other
direction of the Company permitted hereunder.

                  (c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

                  (d) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.

                  (e) The Trustee may consult with counsel, and the written
advice of such counsel or any Opinion of Counsel as to matters of law shall be
full and complete authorization and protection in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

                  (f) Unless otherwise specifically provided in the Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

                  (g) For all purposes under this Indenture, the Trustee shall
not be deemed to have notice or knowledge of any Event of Default (other than
under Section 6.01(1) or 6.01(2)) unless a Trust Officer assigned to and working
in the Trustee's corporate trust office has actual knowledge thereof or unless
written notice of any Event of Default is received by the Trustee at its address
specified in Section 11.02 hereof and such notice references the Securities
generally, the Company or this Indenture.

<PAGE>
                                      -39-

Section 7.03. Individual Rights of Trustee.

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.

Section 7.04. Trustee's Disclaimer.

                  The Trustee makes no representation as to the validity or
adequacy of this Indenture, the Securities or of any prospectus or offering
memorandum used to sell the Securities; it shall not be accountable for the
Company's use of the proceeds from the Securities; it shall not be accountable
for any money paid to the Company, or upon the Company's direction, if made
under and in accordance with any provision of this Indenture; it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee; and it shall not be responsible for any statement of the
Company in this Indenture or in the Securities other than its certificate of
authentication.

Section 7.05. Notice of Defaults.

                  If a Default on a Series occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder of the
Series notice of the Default (which shall specify any uncured Default known to
it) within 90 days after it occurs. Except in the case of a default in payment
of principal of or interest on a Series or a failure to comply with any Change
of Control Provisions, the Trustee may withhold the notice if and so long as the
board of directors of the Trustee, the executive or any trust committee of such
directors and/or responsible officers of the Trustee in good faith determine(s)
that withholding the notice is in the interests of Holders of the Series.

Section 7.06. Reports by Trustee to Holders.

                  Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA
Section 313(a) (but if no event described in TIA Section 313(a)(2) has occurred
within the twelve months preceding the reporting date no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b).

                  A copy of each report at the time of its mailing to
Securityholders shall be delivered to the Company and filed by the Trustee with
the SEC and each national securities exchange on which the Securities are
listed. The Company agrees to notify the Trustee of each national securities
exchange on which the Securities are listed.

<PAGE>
                                      -40-

Section 7.07. Compensation and Indemnity.

                  The Company shall pay to the Trustee or predecessor trustee
from time to time reasonable compensation for their respective services subject
to any written agreement between the Trustee and the Company. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel. The Company shall indemnify the
Trustee and each predecessor trustee, its officers, directors, employees and
agents and hold it harmless against any loss, liability or expense incurred or
made by or on behalf of it in connection with the administration of this
Indenture or the trust hereunder and its duties hereunder including the costs
and expenses of defending itself against or investigating any claim in the
premises. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the Trustee's, or
its officers', directors', employees' or agents' negligence or bad faith.

                  To ensure the Company's payment obligations in this Section,
the Trustee shall have a claim prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of
or interest on particular Securities. When the Trustee incurs expenses or
renders services in connection with an Event of Default specified in Section
6.01 or in connection with Article 6 hereof, the expenses (including the
reasonable fees and expenses of its counsel) and the compensation for services
in connection therewith are to constitute expenses of administration under any
bankruptcy law.

Section 7.08. Replacement of Trustee.

                  The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the removed Trustee in writing and may
appoint a successor trustee with the Company's consent. Such resignation or
removal shall not take effect until the appointment by the Securityholders or
the Company as hereinafter provided of a successor trustee and the acceptance of
such appointment by such successor trustee. The Company may remove the Trustee
and any Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee for any or no
reason, including if:

                  (1) the Trustee fails to comply with Section 7.10 after
         written request by the Company or any bona fide Securityholder who has
         been a Securityholder for at least six months;

                  (2) the Trustee is adjudged a bankrupt or an insolvent;

<PAGE>
                                      -41-

                  (3) a receiver or other public officer takes charge of the
         Trustee or its property; or

                  (4) the Trustee becomes incapable of acting.

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor trustee. If a successor trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or any Holder may petition any court of competent jurisdiction for the
appointment of a successor trustee.

                  A successor trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor trustee shall mail
notice of its succession to each Securityholder.

Section 7.09. Successor Trustee by Merger, etc.

                  If the Trustee consolidates with, merges with or into or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor trustee.

Section 7.10. Eligibility; Disqualification.

                  This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital
and surplus of at least $10,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b).

Section 7.11. Preferential Collection of Claims Against Company.

                  The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

<PAGE>
                                      -42-

                                  ARTICLE EIGHT

                             DISCHARGE OF INDENTURE

Section 8.01. Defeasance upon Deposit of Moneys or U.S. Government Obligations.

                  (a) The Company may, at its option and at any time, elect to
have either paragraph (b) or paragraph (c) below be applied to the outstanding
Securities of any Series upon compliance with the applicable conditions set
forth in paragraph (d).

                  (b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company and the Guarantors shall be
deemed to have been released and discharged from their respective obligations
with respect to the outstanding Securities of a Series on the date the
applicable conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities of a Series, which shall thereafter be deemed to
be "outstanding" only for the purposes of the Sections and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities of a Series to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due and (ii) obligations listed in Section 8.02, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to such Securities.

                  (c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company and the Guarantors shall be
released and discharged from the obligations under any covenant contained in
Article Five, Section 4.05 and any other covenant contained in the Authorizing
Resolution or supplemental indenture relating to such Series to the extent
provided for therein, on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities of such
Series shall thereafter be deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities of a Series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any

<PAGE>
                                      -43-

such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01(3), but, except as specified above, the remainder of this Indenture
and such Securities shall be unaffected thereby.

                  (d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Securities of the
applicable Series:

                  (1) The Company shall have irrevocably deposited in trust with
         the Trustee, pursuant to an irrevocable trust and security agreement in
         form and substance reasonably satisfactory to the Trustee, money in
         U.S. dollars or U.S. government obligations or a combination thereof in
         such amounts and at such times as are sufficient, in the opinion of a
         nationally recognized firm of independent public accountants, to pay
         the principal of and interest on the outstanding Securities of such
         Series to maturity or redemption; provided, however, that the Trustee
         (or other qualifying trustee) shall have received an irrevocable
         written order from the Company instructing the Trustee (or other
         qualifying trustee) to apply such money or the proceeds of such U.S.
         government obligations to said payments with respect to the Securities
         of such Series to maturity or redemption;

                  (2) No Default or Event of Default shall have occurred and be
         continuing on the date of such deposit;

                  (3) Such deposit will not result in a Default under this
         Indenture or a breach or violation of, or constitute a default under,
         any other material instrument or agreement to which the Company or any
         of its Subsidiaries is a party or by which it or any of their property
         is bound;

                  (4) (i) In the event the Company elects paragraph (b) hereof,
         the Company shall deliver to the Trustee an Opinion of Counsel in the
         United States, in form and substance reasonably satisfactory to the
         Trustee, to the effect that (A) the Company has received from, or there
         has been published by, the Internal Revenue Service a ruling or (B)
         since the Issue Date pertaining to such Series, there has been a change
         in the applicable federal income tax law, in either case to the effect
         that, and based thereon such Opinion of Counsel shall state that, or
         (ii) in the event the Company elects paragraph (c) hereof, the Company
         shall deliver to the Trustee an Opinion of Counsel in the United
         States, in form and substance reasonably satisfactory to the Trustee,
         to the effect that, in the case of clauses (i) and (ii), Holders of the
         Securities of such Series will not recognize income, gain or loss for
         federal income tax purposes as a result of such deposit and the
         defeasance contemplated hereby and will be subject to federal income
         tax in the same amounts and in the same manner and at the same times as
         would have been the case if such deposit and defeasance had not
         occurred;

<PAGE>
                                      -44-

                  (5) The Company shall have delivered to the Trustee an
         Officers' Certificate, stating that the deposit under clause (1) was
         not made by the Company with the intent of preferring the Holders of
         the Securities of such Series over any other creditors of the Company
         or with the intent of defeating, hindering, delaying or defrauding any
         other creditors of the Company or others;

                  (6) The Company shall have delivered to the Trustee an Opinion
         of Counsel, reasonably satisfactory to the Trustee, to the effect that,
         (A) the trust funds will not be subject to the rights of Holders of
         Indebtedness of the Company other than the Securities of such Series
         and (B) assuming no intervening bankruptcy of the Company between the
         date of deposit and the 91st day following the deposit and that no
         Holder of Securities of such Series is an insider of the Company, after
         the 91st day following the deposit, the trust funds will not be subject
         to any applicable bankruptcy, insolvency, reorganization or similar law
         affecting creditors' rights generally; and

                  (7) The Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent specified herein relating to the defeasance contemplated by
         this Section 8.01 have been complied with.

                  In the event all or any portion of the Securities of a Series
are to be redeemed through such irrevocable trust, the Company must make
arrangements satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.

                  (e) In addition to the Company's rights above under this
Section 8.01, the Company may terminate all of its obligations under this
Indenture with respect to a Series, and the obligations of the Guarantors shall
terminate with respect to such Series (subject to Section 8.02), when:

                  (1) All Securities of such Series theretofore authenticated
         and delivered (other than Securities which have been destroyed, lost or
         stolen and which have been replaced or paid as provided in Section 2.07
         and Securities for whose payment money has theretofore been deposited
         in trust or segregated and held in trust by the Company and thereafter
         repaid to the Company or discharged from such trust) have been
         delivered to the Trustee for cancellation or all such Securities not
         theretofore delivered to the Trustee for cancellation have become due
         and payable and the Company has irrevocably deposited or caused to be
         deposited with the Trustee as trust funds in trust solely for that
         purpose an amount of money sufficient to pay and discharge the entire
         Indebtedness on the Securities not theretofore delivered to the Trustee
         for cancellation, for principal of and interest;

<PAGE>
                                      -45-

                  (2) The Company has paid or caused to be paid all other sums
         payable hereunder by the Company;

                  (3) The Company has delivered irrevocable instructions to the
         Trustee to apply the deposited money toward the payment of the
         Securities at maturity or redemption, as the case may be; and

                  (4) The Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel, stating that all conditions
         precedent specified herein relating to the satisfaction and discharge
         of this Indenture have been complied with.

Section 8.02. Survival of the Company's Obligations.

                  Notwithstanding the satisfaction and discharge of the
Indenture under Section 8.01, the Company's obligations in paragraph 9 of the
Securities and Sections 2.03 through 2.07, 4.01, 7.07, 7.08, 8.04 and 8.05,
however, shall survive until the Securities of an applicable Series are no
longer outstanding. Thereafter, the Company's obligations in paragraph 9 of the
Securities of such Series and Sections 7.07, 8.04 and 8.05 shall survive (as
they relate to such Series).

Section 8.03. Application of Trust Money.

                  The Trustee shall hold in trust money or U.S. government
obligations deposited with it pursuant to Section 8.01. It shall apply the
deposited money and the money from U.S. government obligations in accordance
with this Indenture to the payment of principal of and interest on the
Securities of the defeased Series.

Section 8.04. Repayment to the Company.

                  The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each such Holder notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Securityholders entitled to the money must look to the Company or any
Guarantor for payment as general creditors unless applicable abandoned property
law designates another person and all liability of the Trustee or such Paying
Agent with respect to such money shall cease.

<PAGE>
                                      -46-

Section 8.05. Reinstatement.

                  If the Trustee is unable to apply any money or U.S. government
obligations in accordance with Section 8.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and each Guarantor's obligations under this Indenture and the Securities
relating to the Series shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee is permitted to
apply all such money or U.S. government obligations in accordance with Section
8.01; provided, however, that (a) if the Company has made any payment of
interest on or principal of any Securities of the Series because of the
reinstatement of their obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. government obligations held by the Trustee and (b) unless otherwise
required by any legal proceeding or any order or judgment of any court or
governmental authority, the Trustee shall return all such money or U.S.
government obligations to the Company promptly after receiving a written request
therefor at any time, if such reinstatement of the Company's obligations has
occurred and continues to be in effect.

                                  ARTICLE NINE

                                   GUARANTEES

Section 9.01. Unconditional Guarantees.

                  Subject to any other provisions set forth in the Authorizing
Resolution or supplemental indenture relating to a particular Series, each
Guarantor hereby unconditionally, jointly and severally, guarantees (each such
guarantee to be referred to herein as the "Guarantee") to each Holder of
Securities of such Series authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) the principal of and interest
on the Securities of such Series will be promptly paid in full when due, subject
to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest of the Securities of such Series and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder, except
obligations to pay principal and interest on any other Series not so guaranteed,
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any Securities of such Series or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
9.04. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities of such Series or this Indenture, the absence of any action to
enforce the same, any

<PAGE>
                                      -47-

waiver or consent by any Holder of the Securities of such Series with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that, subject to Section 9.03, this
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities of the applicable Series, this Indenture
and in this Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Guarantor, any amount paid by the Company or any Guarantor to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.

Section 9.02. Severability.

                  In case any provision of this Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

Section 9.03. Release of a Guarantor.

                  Upon the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or all or substantially all
its assets) to a Person which is not a Restricted Subsidiary and which sale or
disposition is otherwise in compliance with the terms of this Indenture, or,
unless the Company elects otherwise, if any Guarantor is designated as an
Unrestricted Subsidiary in accordance with the terms of this Indenture, then
such Guarantor (in the event of a sale or other disposition of Capital Stock of
such Guarantor or a designation as an Unrestricted Subsidiary) or the Person
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be deemed automatically
and unconditionally released and discharged from all obligations under this
Article Nine without any further action required on the part of the Trustee or
any Holder.

                  An Unrestricted Subsidiary that is a Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under this Article Nine upon

<PAGE>
                                      -48-

notice from the Company to the Trustee to such effect, without any further
action required on the part of the Trustee or any Holder.

                  The Trustee shall deliver an appropriate instrument evidencing
any such release upon receipt of a request by the Company accompanied by an
Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 9.03.

                  Any Guarantor not released in accordance with this Section
9.03 remains liable for the full amount of principal of and interest on the
Securities as provided in this Article Nine.

Section 9.04. Limitation of a Guarantor's Liability.

                  Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 9.06, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.

Section 9.05. Guarantors May Consolidate, etc., on Certain Terms.

                  Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Restricted Guarantor, or shall prevent any sale of assets
or conveyance of the property of a Guarantor as an entirety or substantially as
an entirety to the Company or another Guarantor that is a Restricted Subsidiary
of the Company. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.

Section 9.06. Contribution.

                  In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations

<PAGE>
                                      -49-

with respect to any Securities or any other Guarantor's obligations with respect
to the Guarantee. "Adjusted Net Assets" of such Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any other Subsidiary of the Guarantor in respect of the
obligations of its Guarantee), but excluding liabilities under the Guarantee, of
such Guarantor at such date and (y) the present fair salable value of the assets
of such Guarantor at such date exceeds the amount that will be required to pay
the probable liability of such Guarantor on its debts (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any other Subsidiary of the Company
in respect of the obligations of such Guarantor under its Guarantee), excluding
debt in respect of the Guarantee of such Guarantor, as they become absolute and
matured.

Section 9.07. Waiver of Subrogation.

                  Until all guaranteed obligations under this Indenture and with
respect to all Securities of an applicable Series are paid in full, each
Guarantor hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under the Guarantee
and this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Securities of the applicable Series against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Securities of the applicable Series
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders of the Securities of the applicable Series, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Securities of the applicable Series, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 9.07 is knowingly made in contemplation of such benefits.

Section 9.08. Execution of Guarantee.

                  To evidence their guarantee to the Holders set forth in this
Article Nine, the Guarantors hereby agree to execute the Guarantee in
substantially the form included in Exhibit A or in any such other form set forth
in the Authorizing Resolution or supplemental indenture

<PAGE>
                                      -50-

pertaining to the applicable Series, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each Guarantor hereby
agrees that its Guarantee set forth in this Article Nine shall remain in full
force and effect notwithstanding any failure to endorse on each Security a
notation of such Guarantee. Each such Guarantee shall be signed on behalf of
each Guarantor by two Officers, or an Officer and an Assistant Secretary or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to such Guarantee prior to the authentication of the
Security on which it is endorsed, and the delivery of such Security by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Guarantee on behalf of such Guarantor. Such signatures upon the
Guarantee may be by manual or facsimile signature of such officers and may be
imprinted or otherwise reproduced on the Guarantee, and in case any such officer
who shall have signed the Guarantee shall cease to be such officer before the
Security on which such Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Security
nevertheless may be authenticated and delivered or disposed of as though the
person who signed the Guarantee had not ceased to be such officer of the
Guarantor.

                                   ARTICLE TEN
                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 10.01. Without Consent of Holders.

                  The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to or
consent of any Securityholder of such Series:

                  (1) to cure any ambiguity, omission, defect or inconsistency;

                  (2) to comply with Article Five;

                  (3) to provide that specific provisions of this Indenture
         shall not apply to a Series not previously issued;

                  (4) to create a Series and establish its terms;

                  (5) to provide for uncertificated Securities in addition to or
         in place of certificated Securities;

                  (6) to make any other change that does not adversely affect
         the rights of Securityholders; and

<PAGE>
                                      -51-

                  (7) to remove a Guarantor in respect of any Series which, in
         accordance with the terms of this Indenture applicable to the
         particular Series, ceases to be liable in respect of its Guarantee.

                  After an amendment under this Section 10.01 becomes effective,
the Company shall mail notice of such amendment to the Securityholders.

Section 10.02. With Consent of Holders.

                  The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to any
Securityholder of such Series but with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities of each such
Series affected by the amendment. Each such Series shall vote as a separate
class. The Holders of a majority in principal amount of the outstanding
Securities of any Series may waive compliance by the Company with any provision
of the Securities of such Series or of this Indenture relating to such Series
without notice to any Securityholder. Without the consent of each Securityholder
of a Series affected, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:

                  (1) reduce the amount of Securities of such Series whose
         Holders must consent to an amendment, supplement or waiver;

                  (2) reduce the rate of or change the time for payment of
         interest, including defaulted interest, on any Security;

                  (3) reduce the principal of or change the fixed maturity of
         any Security or alter the provisions (including related definitions)
         with respect to redemption of Securities pursuant to Article Three
         hereof or with respect to any obligations on the part of the Company to
         offer to purchase or to redeem Securities of a Series pursuant to the
         Authorizing Resolution or supplemental indenture pertaining to such
         Series;

                  (4) modify the ranking or priority of the Securities of any
         Series or the Guarantee thereof;

                  (5) release any Guarantor from any of its obligations under
         its Guarantee or this Indenture otherwise than in accordance with the
         terms of this Indenture;

                  (6) make any change in Sections 6.04, 6.07 or this 10.02;

                  (7) waive a continuing Default or Event of Default in the
         payment of the principal of or interest on any Security; or

<PAGE>
                                      -52-

                  (8) make any Security payable at a place or in money other
         than that stated in the Security, or impair the right of any
         Securityholder to bring suit as permitted by Section 6.07.

                  An amendment of a provision included solely for the benefit of
one or more Series does not affect the interests of Securityholders of any other
Series.

                  It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed supplement, but it
shall be sufficient if such consent approves the substance thereof.

Section 10.03. Compliance with Trust Indenture Act.

                  Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.

Section 10.04. Revocation and Effect of Consents.

                  A consent to an amendment, supplement or waiver by a Holder
shall bind the Holder and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. Subject to the following
paragraph, any such Holder or subsequent Holder, however, may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities of any Series
entitled to consent to any amendment, supplement or waiver, which record date
shall be at least 10 days prior to the first solicitation of such consent. If a
record date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.

                  After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 10.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to

<PAGE>
                                      -53-

bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.

Section 10.05. Notation on or Exchange of Securities.

                  If an amendment, supplement or waiver changes the terms of a
Security, the Company may require the Holder of the Security to deliver it to
the Trustee, at which time the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.

Section 10.06. Trustee to Sign Amendments, etc.

                  Subject to Section 7.02(b), the Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive and shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplemental indenture is authorized
or permitted by this Indenture, that it is not inconsistent herewith, and that
it will be valid and binding upon the Company in accordance with its terms.

                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

Section 11.01. Trust Indenture Act Controls.

                  If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.

Section 11.02. Notices.

                  Any order, consent, notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, postage prepaid, addressed as follows:

<PAGE>
                                      -54-

                  if to the Company or to any Guarantor:

                           D.R. Horton, Inc.
                           1901 Ascension Blvd., Suite 100
                           Arlington, Texas  76006

                           Attention:  Chief Financial Officer

                  if to the Trustee:

                           American Stock Transfer & Trust Company
                           6201 15th Avenue
                           Brooklyn, NY  11219

                           Attention:  Corporate Trust Administration

                  The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.

                  Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail at his address as it appears on the
registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it except that
notice to the Trustee shall only be effective upon receipt thereof by the
Trustee.

                  If the Company mails notice or communications to the
Securityholders, it shall mail a copy to the Trustee at the same time.

Section 11.03. Communications by Holders with Other Holders.

                  Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA Section 312(c).

<PAGE>
                                      -55-

Section 11.04. Certificate and Opinion as to Conditions Precedent.

                  Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:

                  (1) an Officers' Certificate (which shall include the
         statements set forth in Section 11.05) stating that, in the opinion of
         the signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                  (2) an Opinion of Counsel (which shall include the statements
         set forth in Section 11.05) stating that, in the opinion of such
         counsel, all such conditions precedent and covenants, compliance with
         which constitutes a condition precedent, if any, provided for in this
         Indenture relating to the proposed action or inaction, have been
         complied with and that any such section does not conflict with the
         terms of the Indenture.

Section 11.05. Statements Required in Certificate or Opinion.

                  Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                  (1) a statement that the person making such certificate or
         opinion has read such covenant or condition;

                  (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (3) a statement that, in the opinion of such person, he has
         made such examination or investigation as is necessary to enable him to
         express an informed opinion as to whether or not such covenant or
         condition has been complied with; and

                  (4) a statement as to whether or not, in the opinion of such
         person, such condition or covenant has been complied with.

Section 11.06. Rules by Trustee and Agents.

                  The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules for its functions.

<PAGE>
                                      -56-

Section 11.07. Legal Holidays.

                  A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or
a day on which banking institutions in Fort Worth, Texas and New York, New York
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period. A
Business Day is any day other than a Legal Holiday.

Section 11.08. Governing Law.

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

Section 11.09. No Adverse Interpretation of Other Agreements.

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

Section 11.10. No Recourse Against Others.

                  All liability described in paragraph 14 of the Initial
Securities or paragraph 13 of the Exchange Securities of any director, officer,
employee or stockholder, as such, of the Company is waived and released.

Section 11.11. Successors and Assigns.

                  All covenants and agreements of the Company in this Indenture
and the Securities shall bind its successors and assigns. All agreements of the
Trustee in this Indenture shall bind its successors and assigns.

Section 11.12. Duplicate Originals.

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

Section 11.13. Severability.

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

<PAGE>
                                      -57-

Section 11.14. Ranking.

                  The Securities issued under this Indenture will rank pari
passu in right of payment with the securities under that certain indenture dated
as of June 9, 1997, as supplemented, among the Company, the guarantors thereto
and American Stock Transfer & Trust Company, as trustee. The Securities issued
under this Indenture are hereby designated "Designated Senior Indebtedness" for
purposes of (i) the indenture, dated as of September 11, 2000, as supplemented,
among the Company, the guarantors thereto, and American Stock Transfer & Trust
Company, as trustee and (ii) the indenture dated as of June 28, 2001, among the
Company, as successor to Schuler Homes, Inc., the guarantors thereto and U.S.
Bank Trust National Association, as trustee.

<PAGE>
                                      -58-

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

                                     D.R. HORTON, INC.

                                     By: /s/ SAMUEL R. FULLER
                                        ---------------------------------------
                                        Samuel R. Fuller
                                        Executive Vice President, Treasurer and
                                        Chief Financial Officer

                                      S-1
<PAGE>

AMERICAN STOCK TRANSFER & TRUST
  COMPANY, as Trustee

By: /s/ HERBERT J. LEMMER
   -----------------------------
   Name: Herbert J. Lemmer
   Title: Vice President

                                      S-2
<PAGE>

                    GUARANTORS:

                    C. RICHARD DOBSON BUILDERS, INC.
                    CHI CONSTRUCTION COMPANY
                    CHTEX OF TEXAS, INC.
                    CONTINENTAL HOMES, INC.
                    CONTINENTAL HOMES OF FLORIDA, INC.
                    CONTINENTAL RESIDENTIAL, INC.
                    D.R. HORTON, INC. - BIRMINGHAM
                    D.R. HORTON, INC. - CHICAGO
                    D.R. HORTON, INC. - DENVER
                    D.R. HORTON, INC. - DIETZ-CRANE
                    D.R. HORTON, INC. - GREENSBORO
                    D.R. HORTON, INC. - JACKSONVILLE
                    D.R. HORTON, INC. - LOUISVILLE
                    D.R. HORTON, INC. - MINNESOTA
                    D.R. HORTON, INC. - NEW JERSEY
                    D.R. HORTON, INC. - PORTLAND
                    D.R. HORTON, INC. - SACRAMENTO
                    D.R. HORTON, INC. - TORREY
                    D.R. HORTON LOS ANGELES HOLDING COMPANY, INC.
                    D.R. HORTON SAN DIEGO HOLDING COMPANY, INC.
                    DRH CAMBRIDGE HOMES, INC.
                    DRH CONSTRUCTION, INC.
                    DRH REGREM II, INC.
                    DRH REGREM III, INC.
                    DRH REGREM IV, INC.
                    DRH REGREM V, INC.
                    DRH SOUTHWEST CONSTRUCTION, INC.
                    DRH TITLE COMPANY OF COLORADO, INC.
                    DRH TUCSON CONSTRUCTION, INC.
                    DRHI, INC.
                    KDB HOMES, INC.
                    MEADOWS I, LTD.
                    MEADOWS VIII, LTD.
                    MEADOWS IX, INC.
                    MEADOWS X, INC.

                    By:/s/ SAMUEL R. FULLER
                       ----------------------------------------------
                       Samuel R. Fuller
                       Treasurer

                                      S-3
<PAGE>

                 CH INVESTMENTS OF TEXAS, INC.
                 MEADOWS II, LTD.

                 By: /s/ WILLIAM PECK
                    -----------------------------------------
                    William Peck
                    President

                                      S-4
<PAGE>

              CONTINENTAL HOMES OF TEXAS, L.P.

              By: CHTEX of Texas, Inc., its general partner

                  By: /s/ SAMUEL R. FULLER
                     ---------------------------------------------
                     Samuel R. Fuller, Treasurer

              D.R. HORTON MANAGEMENT COMPANY, LTD.
              D.R. HORTON - EMERALD, LTD.
              D.R. HORTON - TEXAS, LTD.
              DRH REGREM VII, LP

              By: Meadows I, Ltd., its general partner

                  By: /s/ SAMUEL R. FULLER
                     ---------------------------------------------
                     Samuel R. Fuller
                     Treasurer

              SGS COMMUNITIES AT GRANDE QUAY, LLC

              By: Meadows IX, Inc., a member

                  By: /s/ SAMUEL R. FULLER
                     ---------------------------------------------
                     Samuel R. Fuller
                     Treasurer

              and

              By: Meadows X, Inc., a member

                  By: /s/ SAMUEL R. FULLER
                     ---------------------------------------------
                     Samuel R. Fuller
                     Treasurer

              DRH CAMBRIDGE HOMES, LLC
              DRH REGREM VIII, LLC

              By: D.R. Horton, Inc. - Chicago, a member

                  By: /s/ SAMUEL R. FULLER
                     ---------------------------------------------
                     Samuel R. Fuller
                     Treasurer

                                      S-5
<PAGE>

              ALLEGRA, LLC
              APLAM, LLC
              WESTERN PACIFIC HOUSING CO.
              WESTERN PACIFIC HOUSING-ANTIGUA, LLC
              WESTERN PACIFIC HOUSING-AVIARA, L.P.
              WESTERN PACIFIC HOUSING-BOARDWALK, LLC
              WESTERN PACIFIC HOUSING-BROADWAY, LLC
              WESTERN PACIFIC HOUSING-CANYON PARK, LLC
              WESTERN PACIFIC HOUSING-CARMEL, LLC
              WESTERN PACIFIC HOUSING-CARRILLO, LLC
              WESTERN PACIFIC HOUSING-COMMUNICATIONS HILL, LLC
              WESTERN PACIFIC HOUSING-CREEKSIDE, LLC
              WESTERN PACIFIC HOUSING-CULVER CITY, L.P.
              WESTERN PACIFIC HOUSING-LOMAS VERDES, LLC
              WESTERN PACIFIC HOUSING-LOST HILLS PARK, LLC
              WESTERN PACIFIC HOUSING-MCGONIGLE CANYON, LLC
              WESTERN PACIFIC HOUSING-MOUNTAINGATE, L.P.
              WESTERN PACIFIC HOUSING-NORCO ESTATES, LLC
              WESTERN PACIFIC HOUSING-OSO, L.P.
              WESTERN PACIFIC HOUSING-PARK AVENUE EAST, LLC
              WESTERN PACIFIC HOUSING-PARK AVENUE WEST, LLC
              WESTERN PACIFIC HOUSING-PLAYA VISTA, LLC
              WESTERN PACIFIC HOUSING-ROBINHOOD RIDGE, LLC
              WESTERN PACIFIC HOUSING-SANTA FE, LLC
              WESTERN PACIFIC HOUSING-SCRIPPS II, LLC
              WESTERN PACIFIC HOUSING-SCRIPPS, L.P.
              WESTERN PACIFIC HOUSING-SEACOVE, L.P.
              WESTERN PACIFIC HOUSING-STUDIO 528, LLC
              WESTERN PACIFIC HOUSING-TERRA BAY DUETS, LLC
              WESTERN PACIFIC HOUSING-TORRANCE, LLC
              WESTERN PACIFIC HOUSING-TORREY COMMERCIAL, LLC
              WESTERN PACIFIC HOUSING-TORREY MEADOWS, LLC
              WESTERN PACIFIC HOUSING-TORREY MULTI-FAMILY, LLC
              WESTERN PACIFIC HOUSING-TORREY VILLAGE CENTER, LLC
              WESTERN PACIFIC HOUSING-VINEYARD TERRACE, LLC
              WESTERN PACIFIC HOUSING-WINDEMERE, LLC
              WESTERN PACIFIC HOUSING-WINDFLOWER, L.P.
              WPH-CAMINO RUIZ, LLC
              WPH-HPH, LLC

              By: LAMCO Housing, Inc.,
                  its Member or General Partner

              By: /s/ SAMUEL R. FULLER
                 ----------------------------------------------------
                 Samuel R. Fuller
                 Vice President

                                      S-6
<PAGE>

              SCHULER HOMES OF ARIZONA LLC
              SHA CONSTRUCTION LLC

              By: SRHI LLC,
                  its Member

                  By: SLHR of Nevada, Inc.,
                      its Member

                      By: /s/ SAMUEL R. FULLER
                         -------------------------------------------
                         Samuel R. Fuller
                         Vice President

              HPH HOMEBUILDERS 2000 L.P.
                     PORTER GP LLC

              By: WPH-HPH, LLC,
                  its General Partner or Member

                  By: LAMCO Housing, Inc.,
                      its Member

                      By: /s/ SAMUEL R. FULLER
                         -------------------------------------------
                         Samuel R. Fuller
                         Vice President

              AP LHI, INC.
              AP WESTERN GP CORPORATION
              AP WP OPERATING CORPORATION
              LAMCO HOUSING, INC.
              MELODY HOMES, INC.
              MELMORT CO.
              SCHULER HOMES OF CALIFORNIA, INC.
              SCHULER HOMES OF OREGON, INC.
              SCHULER HOMES OF WASHINGTON, INC.
              SCHULER MORTGAGE, INC.
              SCHULER REALTY HAWAII, INC.
              SCHULER REALTY/MAUI, INC.
              SHLR OF CALIFORNIA, INC.
              SHLR OF COLORADO, INC.
              SHLR OF NEVADA, INC.
              SHLR OF UTAH, INC.
              SHLR OF WASHINGTON, INC.
              VERTICAL CONSTRUCTION CORPORATION
              WESTERN PACIFIC FUNDING, INC.
              WESTERN PACIFIC HOUSING MANAGEMENT, INC.
              WESTERN PACIFIC HOUSING, INC.

              By: /s/ SAMUEL R. FULLER
                 ----------------------------------------------------
                 Samuel R. Fuller
                 Vice President

                                      S-7
<PAGE>

              D.R. HORTON-SCHULER HOMES, LLC

              By: Vertical Construction Corporation,
                  its Manager

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

              SRHI LLC

              By: SHLR of Nevada, Inc.,
                  its Member

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

              SSHI LLC

              By: SHLR of Washington, Inc.,
                  its Member

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

              WESTERN PACIFIC HOUSING-COPPER CANYON, LLC
              WESTERN PACIFIC HOUSING-PACIFIC PARK II, LLC
              WESTERN PACIFIC HOUSING-POINSETTIA, L.P.
              WESTERN PACIFIC HOUSING-DEL VALLE, LLC

              By: AP Western GP Corporation,
                  its Member or General Partner

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

              WESTERN PACIFIC HOUSING-RIVER RIDGE, LLC

              By: AP LHI, Inc.,
                  its Member

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

              AP WP PARTNERS, L.P.

              By: AP WP Operating Corporation,
                  its General Partner

                  By: /s/ SAMUEL R. FULLER
                     ----------------------------------------
                     Samuel R. Fuller
                     Vice President

                                      S-8
<PAGE>

                                                                       EXHIBIT A

NO.                                                             CUSIP NO.: _____

                               [TITLE OF SECURITY]

                                D.R. HORTON, INC.
                             A DELAWARE CORPORATION

promises to pay to

or registered assigns
the principal sum of                                     [Dollars]a on

[Title of Security]
Interest Payment Dates:                              and
Record Dates:                             and

Authenticated:                                    Dated:

                                                  D.R. HORTON, INC.

                                                  [Seal]

                                                  By
                                                    ----------------------------
                                                    Title:

                                                  By
                                                    ----------------------------
                                                    Title:

American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the
Securities referred to in the within
mentioned Indenture.

By:
   -----------------------------------------
           Authorized Signatory

----------
a   Or other currency. Insert corresponding provisions on reverse side of
    Security in respect of foreign currency denomination or interest payment
    requirement.

                                       A-1
<PAGE>

                                D.R. HORTON, INC.

                          [Title of Security], Series A

1. Interest.

                  D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on
__________________ and ______________ of each year, commencing on
__________________, until the principal is paid or made available for payment.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid,
from _______________, 20 , provided that, if there is no existing default in the
payment of interest, and if this Security is authenticated between a record date
referred to on the face hereof and the next succeeding interest payment date,
interest shall accrue from such interest payment date. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment.

                  The Company will pay interest on the Securities (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Securities at the close of business on
the [Insert record dates]. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts.

3. Paying Agent and Registrar.

                  Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.

4. Indenture.

                  The Company issued the Securities under an Indenture dated as
of April 11, 2002 ("Indenture"), among the Company, the Guarantors and the
Trustee. The terms of the Securities and the Guarantees include those stated in
the Indenture (including those terms set forth in the Authorizing Resolution or
supplemental indenture pertaining to the Securities of the Series of which this
Security is a part) and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Securities and the Guarantees are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
them. Capitalized terms not defined herein have the

                                      A-2
<PAGE>

meanings given to those terms in the Indenture. The Securities include the
Initial Securities and the Exchange Securities issued in exchange for the
Initial Securities pursuant to the Registration Rights Agreement (as hereinafter
defined).

                  The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture and the applicable
Authorizing Resolution or supplemental indenture. Requests may be made to: D.R.
Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006,
Attention: Chief Financial Officer.

5. Optional Redemption.(a)

                  The Company may redeem the Securities at any time on or after
______________, ____, in whole or in part, at the following redemption prices
(expressed as a percentage of their principal amount) together with interest
accrued and unpaid to the date fixed for redemption:

                           If redeemed during the
                             twelve-month period
                        commencing on ___________ and
                        ending on ___________ in each
                           of the following years               Percentage

                  [Insert provisions relating to redemption at option of
Holders, if any]

                  Selection of the Securities or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Securities are to be redeemed at
the registered address of such Holder. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at the registered address of such Holder.
Securities in denominations larger than $1,000 may be redeemed in part. On and
after the redemption dates interest ceases to accrue on the Securities or
portions thereof called for redemption, provided that if the Company shall

----------
(a)   If applicable.

                                      A-3
<PAGE>

default in the payment of such Securities at the redemption price together with
accrued interest, interest shall continue to accrue at the rate borne by the
Securities.

6. Mandatory Redemption.(a)

                  The Company shall redeem % of the aggregate principal amount
of Securities originally issued under the Indenture on each of , which
redemptions are calculated to retire % of the Securities originally issued prior
to maturity. Such redemptions shall be made at a redemption price equal to 100%
of the principal amount thereof, together with accrued interest to the
redemption date. The Company may reduce the principal amount of Securities to be
redeemed pursuant to this Paragraph 6 by the principal amount of any Securities
previously redeemed, retired or acquired, otherwise than pursuant to this
Paragraph 6, that the Company has delivered to the Trustee for cancellation and
not previously credited to the Company's obligations under this Paragraph 6.
Each such Security shall be received and credited for such purpose by the
Trustee at the redemption price and the amount of such mandatory redemption
payment shall be reduced accordingly.

7. Registration Rights Agreement.

                  The Holder of this Security is entitled to the benefits of a
Registration Rights Agreement, dated as of [ ], among the Company, the
Guarantors and the Initial Purchasers named therein (as such may be amended from
time to time, the "Registration Rights Agreement"). Capitalized terms used in
this subsection but not defined herein have the meanings assigned to them in the
Registration Rights Agreement.

                  If (i) within 90 days after the Issue Date, neither the
Exchange Offer Registration Statement nor the Shelf Registration Statement has
been filed with the Commission; (ii) within 150 days after the Issue Date, the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, has not been declared effective; (iii) within 180 days after the
Issue Date, the Exchange Offer has not been consummated; or (iv) after either
the Exchange Offer Registration Statement or the Shelf Registration Statement
has been declared effective, such Registration Statement thereafter ceases to be
effective or usable (subject, in the case of the Shelf Registration Statement,
to the exceptions set forth in the Registration Rights Agreement) in connection
with resales of Initial Securities or Exchange Securities in accordance with and
during the periods specified in Sections 2 and 3 of the Registration Rights
Agreement (each such event referred to in clauses (i) through (iv), a
"Registration Default"), liquidated damages ("Liquidated Damages") will accrue
on the Initial Securities and the Exchange Securities from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured. Liquidated

----------
(a)   If applicable.

                                      A-4
<PAGE>

Damages will accrue at a rate equal to 0.25% per annum of the aggregate
principal amount of the Securities during the 90-day period immediately
following the occurrence of any Registration Default and shall increase by 0.25%
per annum for each subsequent 90-day period during which such Registration
Default continues, but in no event shall such Liquidated Damages exceed 1.00%
per annum.

8. Denominations, Transfer, Exchange.

                  The Securities are in registered form only without coupons in
denominations of $1,000a and integral multiples of $1,000. A Holder may transfer
or exchange Securities by presentation of such Securities to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Security selected
for redemption, except the unredeemed part thereof if the Security is redeemed
in part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.

9. Persons Deemed Owners.

                  The registered Holder of this Security shall be treated as the
owner of it for all purposes.

10. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.

11. Amendment, Supplement, Waiver.

                  Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Securities of each Series
affected by the amendment and any past default or compliance with any provision
relating to any Series of the Securities may be waived in a particular instance
with the consent of the Holders of a majority in principal amount of the
outstanding Securities of such Series.(b) Without the consent of any
Securityholder, the Company

----------
(a)   If applicable. Insert different or additional denominations and multiples.

(b)   If different terms apply, insert a brief summary thereof.

                                      A-5
<PAGE>

and the Trustee may amend or supplement the Indenture or the Securities to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Securities
in addition to or in place of certificated Securities, to create a Series and
establish its terms, to remove a Guarantor in respect of any Series which, in
accordance with the terms of the Indenture, ceases to be liable in respect of
its Guarantee, or to make any other change, provided such action does not
adversely affect the rights of any Securityholder.

12. Successor Corporation.

                  When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.

13. Trustee Dealings With Company.

                  American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.

14. NO RECOURSE AGAINST OTHERS.

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.

15. DISCHARGE OF INDENTURE.

                  The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.

16. Authentication.

                  This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.

17. Abbreviations.

                  Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

                                      A-6
<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign this Security, fill in the
form below:

                  I or we assign and transfer this Security to

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

--------------------------------------------------------------------------------
              (Insert assignee's social security or tax ID number)

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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint

--------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

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

Date:                                Your signature:
     ----------------                               ----------------------------
                                     (Sign exactly as your name appears on the
                                     other side of this Security)

                               SIGNATURE GUARANTEE

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

                  In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of

<PAGE>

a registration statement under the Securities Act of 1933, as amended (the
"Securities Act") covering resales of this Security (which effectiveness shall
not have been suspended or terminated at the date of the transfer) and (ii) two
years from the Issue Date, the undersigned confirms that it has not utilized any
general solicitation or general advertising in connection with the transfer:

                                   [Check One]

(1)  __  to the Company or a subsidiary thereof; or

(2)  __  pursuant to and in compliance with Rule 144A under the Securities Act
         of 1933, as amended; or

(3)  __  to an institutional "accredited investor" (as defined in Rule
         501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
         amended) that has furnished to the Trustee a signed letter containing
         certain representations and agreements (the form of which letter can be
         obtained from the Trustee); or

(4)  __  outside the United States to a "foreign person" in compliance with Rule
         904 of Regulation S under the Securities Act of 1933, as amended; or

(5)  __  pursuant to the exemption from registration provided by Rule 144 under
         the Securities Act of 1933, as amended; or

(6)  __  pursuant to an effective registration statement under the Securities
         Act of 1933, as amended; or

(7)  __  pursuant to another available exemption from the registration
         requirements of the Securities Act of 1933, as amended;

and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

<PAGE>

                  [ ] The transferee is an Affiliate of the Company.

                  Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Securities, in their sole discretion,
such written legal opinions, certifications (including an investment letter in
the case of box (3) or (7)) and other information as the Trustee or the Company
has reasonably requested to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.

                  If none of the foregoing items are checked, the Trustee or
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.14 of the Indenture
shall have been satisfied.

Dated:                             Signed:
      ----------------------              ----------------------------------
                                          (Sign exactly as name appears on the
                                          other side of this Security)

Signature Guarantee:
                    --------------------------------------
                        (Signature must be guaranteed)

                               SIGNATURE GUARANTEE

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

<PAGE>

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

                  The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.

Dated:
      ----------------------      ----------------------------------------------
                                  NOTICE: To be executed by an executive officer

<PAGE>

              [FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]

                                    GUARANTEE

                  [List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Nine of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.

                  No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Security by
accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Guarantees.

                  Each holder of a Security by accepting a Security agrees that
any Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.

<PAGE>

                  The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.

                                    [List of Guarantors]

                                    By:
                                       -----------------------------------------
                                       Title:
                                             -----------------------------------

<PAGE>

                                                                       EXHIBIT B

NO.                                                           CUSIP NO.: _______

                               [TITLE OF SECURITY]

                                D.R. HORTON, INC.
                             A DELAWARE CORPORATION

promises to pay to

or registered assigns
the principal sum of                                    [Dollars](a) on

[Title of Security]
Interest Payment Dates:                          and
Record Dates:                        and

Authenticated:                               Dated:

                                             D.R. HORTON, INC.

                                             [Seal]

                                             By
                                               ---------------------------------
                                               Title:

                                             By
                                               ---------------------------------
                                               Title:

American Stock Transfer & Trust Company, as Trustee, certifies that this is one
of the Securities referred to in the within mentioned Indenture.

By:
    ----------------------------------------
           Authorized Signatory

----------
(a)   Or other currency. Insert corresponding provisions on reverse side of
      Security in respect of foreign currency denomination or interest
      payment requirement.

                                      B-1
<PAGE>

                                D.R. HORTON, INC.

                               [TITLE OF SECURITY]

1. Interest.

                  D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on
__________________ and ______________ of each year, commencing on
________________ until the principal is paid or made available for payment.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid,
from _______________, 20 , provided that, if there is no existing default in the
payment of interest, and if this Security is authenticated between a record date
referred to on the face hereof and the next succeeding interest payment date,
interest shall accrue from such interest payment date. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment.

                  The Company will pay interest on the Securities (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Securities at the close of business on
the [Insert record dates] immediately preceding the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.

3. Paying Agent and Registrar.

                  Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.

4. Indenture.

                  The Company issued the Securities under an Indenture dated as
of April 11, 2002 ("Indenture"), among the Company, the Guarantors and the
Trustee. This Security is one of the duly authorized Exchange Securities of the
Company designated as its [ ]% Senior Notes due [ ] (the "Exchange Securities").
The terms of the Securities and the Guarantees include those stated in the
Indenture (including those terms set forth in the Authorizing Resolution or
supplemental indenture pertaining to the Securities of the Series of which this
Security is a part) and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Securities and the Guarantees are

                                      B-2
<PAGE>

subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of them. Capitalized terms not defined herein have the
meanings given to those terms in the Indenture. The Securities include the
Initial Securities and the Exchange Securities issued in exchange for the
Initial Securities pursuant to the Registration Rights Agreement (as hereinafter
defined).

                  The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture and the applicable
Authorizing Resolution or supplemental indenture. Requests may be made to: D.R.
Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006,
Attention: Chief Financial Officer.

5. Optional Redemption.(a)

                  The Company may redeem the Securities at any time on or after
______________, ____, in whole or in part, at the following redemption prices
(expressed as a percentage of their principal amount) together with interest
accrued and unpaid to the date fixed for redemption:

                           If redeemed during the
                             twelve-month period
                        commencing on ___________ and
                        ending on ___________ in each
                           of the following years               Percentage

                  [Insert provisions relating to redemption at option of
Holders, if any]

                  Selection of the Securities or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rate basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Securities are to be redeemed at
the registered address of such Holder. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at the registered address of such Holder.
Securities in denominations larger than

----------
(a)    If applicable.

                                      B-3
<PAGE>

$1,000 may be redeemed in part. On and after the redemption dates interest
ceases to accrue on the Securities or portions thereof called for redemption,
provided that if the Company shall default in the payment of such Security at
the redemption price together with accrued interest, interest shall continue to
accrue at the rate borne by the Securities.

6. Mandatory Redemption.(a)

                  The Company shall redeem     % of the aggregate principal
amount of Securities originally issued under the Indenture on each of         ,
which redemptions are calculated to retire      % of the Securities originally
issued prior to maturity. Such redemptions shall be made at a redemption price
equal to 100% of the principal amount thereof, together with accrued interest to
the redemption date. The Company may reduce the principal amount of Securities
to be redeemed pursuant to this Paragraph 6 by the principal amount of any
Securities previously redeemed, retired or acquired, otherwise than pursuant to
this Paragraph 6, that the Company has delivered to the Trustee for cancellation
and not previously credited to the Company's obligations under this Paragraph 6.
Each such Security shall be received and credited for such purpose by the
Trustee at the redemption price and the amount of such mandatory redemption
payment shall be reduced accordingly.

7. Denominations, Transfer, Exchange.

                  The Securities are in registered form only without coupons in
denominations of $1,000(b) and integral multiples of $1,000. A Holder may
transfer or exchange Securities by presentation of such Securities to the
Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of other
denominations. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
transfer or exchange any Security selected for redemption, except the unredeemed
part thereof if the Security is redeemed in part, or transfer or exchange any
Securities for a period of 15 days before a selection of Securities to be
redeemed.

8. Persons Deemed Owners.

                  The registered Holder of this Security shall be treated as the
owner of it for all purposes.

----------
(a)   If applicable.

(b)   If applicable. Insert different or additional denominations and multiples.

                                      B-4
<PAGE>

9. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.

10. Amendment, Supplement, Waiver.

                  Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Securities of each Series
affected by the amendment and any past default or compliance with any provision
relating to any Series of the Securities may be waived in a particular instance
with the consent of the Holders of a majority in principal amount of the
outstanding Securities of such Series(a). Without the consent of any
Securityholder, the Company and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Securities in addition to or in place of certificated
Securities, to create a Series and establish its terms, to remove a Guarantor in
respect of any Series which, in accordance with the terms of the Indenture,
ceases to be liable in respect of its Guarantee, or to make any other change,
provided such action does not adversely affect the rights of any Securityholder.

11. Successor Corporation.

                  When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.

12. Trustee Dealings With Company.

                  American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.

13. No Recourse Against Others.

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each

----------
(a)    If different terms apply, insert a brief summary thereof.

                                      B-5
<PAGE>

Securityholder by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Securities.

14. Discharge of Indenture.

                  The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.

15. Authentication.

                  This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.

16. Abbreviations.

                  Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

                                      B-6
<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign this Security, fill in the
form below:

                  I or we assign and transfer this Security to

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

--------------------------------------------------------------------------------
              (Insert assignee's social security or tax ID number)

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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint

--------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

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

Date:                               Your signature:
      -------------------                          -----------------------------
                                    (Sign exactly as your name appears on the
                                    other side of this Security)

                               SIGNATURE GUARANTEE

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

                                      B-7
<PAGE>

              [FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]

                                    GUARANTEE

                  [List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Nine of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.

                  No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Security by
accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Guarantees.

                  Each holder of a Security by accepting a Security agrees that
any Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.

                                      B-8
<PAGE>

                  The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.

                                       [List of Guarantors]

                                       By:
                                          --------------------------------------

                                      B-9
<PAGE>

                                                                       EXHIBIT C

                            Form of Certificate To Be
                          Delivered in Connection with
                    Transfers to Non-QIB Accredited Investors

                                                                          [Date]

American Stock Transfer & Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, NY  11219

Ladies and Gentlemen:

                  In connection with our proposed purchase of [Name of Security]
(the "Securities") of D.R. Horton, Inc., a Delaware corporation (the "Company"),
we confirm that:

                  1. We have received a copy of the Offering Memorandum (the
         "Offering Memorandum"), dated [ ], relating to the Securities and such
         other information as we deem necessary in order to make our investment
         decision. We acknowledge that we have read and agreed to the matters
         stated in the section entitled "Notice to Investors" of such Offering
         Memorandum.

                  2. We understand that any subsequent transfer of the
         Securities is subject to certain restrictions and conditions set forth
         in the Indenture relating to the Securities (the "Indenture") as
         described in the Offering Memorandum and the undersigned agrees to be
         bound by, and not to resell, pledge or otherwise transfer the
         Securities except in compliance with, such restrictions and conditions
         and the Securities Act of 1933, as amended (the "Securities Act"), and
         all applicable state securities laws.

                  3. We understand that the offer and sale of the Securities
         have not been registered under the Securities Act, and that the
         Securities may not be offered or sold within the United States or to,
         or for the account or benefit of, U.S. persons except as permitted in
         the following sentence. We agree, on our own behalf and on behalf of
         any accounts for which we are acting as hereinafter stated, that if we
         should sell any Securities, we will do so only (i) to the Company or
         any subsidiary thereof, (ii) inside the United States in accordance
         with Rule 144A under the Securities Act to a "qualified institutional
         buyer" (as defined in Rule 144A promulgated under the Securities Act),
         (iii) inside the United States to an institutional "accredited
         investor" (as defined below) that, prior to such transfer, furnishes
         (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee
         (as defined in the Indenture) a signed letter containing certain
         representations and agreements relating to the restrictions on transfer
         of the Securities (the form of which letter can be obtained from the
         Trustee), (iv) outside the United States in accordance with Rule 904 of
         Regulation S promulgated under the Securities

                                      C-1
<PAGE>

         Act to non-U.S. persons, (v) pursuant to the exemption from
         registration provided by Rule 144 under the Securities Act (if
         available), or (vi) pursuant to an effective registration statement
         under the Securities Act, and we further agree to provide to any person
         purchasing any of the Securities from us a notice advising such
         purchaser that resales of the Securities are restricted as stated
         herein.

                  4. We understand that, on any proposed resale of any
         Securities, we will be required to furnish to the Trustee and the
         Company such certification, legal opinions and other information as the
         Trustee and the Company may reasonably require to confirm that the
         proposed sale complies with the foregoing restrictions. We further
         understand that the Securities purchased by us will bear a legend to
         the foregoing effect.

                  5. We are an institutional "accredited investor" (as defined
         in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
         Act) and have such knowledge and experience in financial and business
         matters as to be capable of evaluating the merits and risks of our
         investment in the Securities, and we and any accounts for which we are
         acting are each able to bear the economic risk of our or their
         investment, as the case may be.

                  6. We are acquiring the Securities purchased by us for our
         account or for one or more accounts (each of which is an institutional
         "accredited investor") as to each of which we exercise sole investment
         discretion.

                  You, the Company, the Trustee and others are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.

                                        Very truly yours,

                                        [Name of Transferee]

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                      C-2
<PAGE>

                                                                       Exhibit D

                       Form of Certificate To Be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S

                                                                          [Date]
American Stock Transfer & Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, NY  11219

                  Re: D.R. Horton, Inc. (the "Company")
                      [Name of Security] (the "Securities")

Ladies and Gentlemen:

                  In connection with our proposed sale of $[ ] aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:

                  (1) the offer of the Securities was not made to a person in
         the United States;

                  (2) either (a) at the time the buy order was originated, the
         transferee was outside the United States or we and any person acting on
         our behalf reasonably believed that the transferee was outside the
         United States, or (b) the transaction was executed in, on or through
         the facilities of a designated off-shore securities market and neither
         we nor any person acting on our behalf knows that the transaction has
         been pre-arranged with a buyer in the United States;

                  (3) no directed selling efforts have been made in the United
         States in contravention of the requirements of Rule 903 or Rule 904 of
         Regulation S, as applicable;

                  (4) the transaction is not part of a plan or scheme to evade
         the registration requirements of the Securities Act; and

                  (5) we have advised the transferee of the transfer
         restrictions applicable to the Securities.

                  You, the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.

                                      D-1
<PAGE>

                                        Very truly yours,

                                        [Name of Transferor]

                                            By:
                                               ---------------------------------
                                                      Authorized Signature

                                      D-2<PAGE>
                                                                    EXHIBIT 4.17

                                                                  EXECUTION COPY

================================================================================

                D.R. HORTON, INC. AND THE GUARANTORS PARTY HERETO

                           8.5% SENIOR NOTES DUE 2012

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

                          FIRST SUPPLEMENTAL INDENTURE

                           DATED AS OF APRIL 11, 2002

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

                    AMERICAN STOCK TRANSFER & TRUST COMPANY,
                                     TRUSTEE

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                               Page
                                                                               ----
<S>            <C>                                                             <C>
                                   ARTICLE ONE

                    Scope of Supplemental Indenture; General

                                   ARTICLE TWO

                               Certain Definitions

                                  ARTICLE THREE

                                    Covenants

Section 3.01.  Repurchase of Notes upon Change of Control........................25
Section 3.02.  Limitations on Indebtedness.......................................26
Section 3.03.  Limitations on Restricted Payments................................27
Section 3.04.  Limitations on Transactions with Affiliates.......................29
Section 3.05.  Limitations on Dispositions of Assets.............................30
Section 3.06.  Limitations on Liens..............................................31
Section 3.07.  Limitations on Restrictions Affecting Restricted Subsidiaries.....32
Section 3.08.  Limitations on Mergers, Consolidations and Sales of Assets........33
Section 3.09.  Reports to Holders of Notes.......................................34

                                  ARTICLE FOUR

                                  Miscellaneous

Section 4.01.  Governing Law.....................................................34
Section 4.02.  No Adverse Interpretation of Other Agreements.....................34
Section 4.03.  No Recourse Against Others........................................35
Section 4.04.  Successors and Assigns............................................35
Section 4.05.  Duplicate Originals...............................................35
Section 4.06.  Severability......................................................35
</Table>

                                      -i-
<PAGE>

                  FIRST SUPPLEMENTAL INDENTURE dated as of April 11, 2002
("Supplemental Indenture"), to the Indenture dated as of April 11, 2002 (as
amended, modified or supplemented from time to time in accordance therewith, the
"Indenture"), by and among D.R. HORTON, INC., a Delaware corporation (the
"Company"), each of the Guarantors (as defined herein) and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as trustee (the "Trustee").

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

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

                  WHEREAS, the Company and the Guarantors desire and have
requested the Trustee to join them in the execution and delivery of this
Supplemental Indenture in order to establish and provide for the issuance by the
Company of a series of Securities designated as its 8.5% Senior Notes due 2012.
The 8.5% Senior Notes due 2012 shall be substantially in the form attached
hereto as Exhibit A (the "Initial Notes"), and the 8.5% Senior Notes due 2012 to
be offered in exchange for the Initial Notes pursuant to the terms of the
Registration Rights Agreement, shall be substantially in the form attached
hereto as Exhibit B (the "Exchange Notes" and together with the Initial Notes,
the "Notes"), guaranteed by the Guarantors, on the terms set forth herein;

                  WHEREAS, Section 2.01 of the Indenture provides that a
supplemental indenture may be entered into by the Company, the Guarantors and
the Trustee for such purpose provided certain conditions are met;

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

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

                  NOW, THEREFORE:

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

<PAGE>
                                       2

                                   ARTICLE ONE

                    SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL

                  The changes, modifications and supplements to the Indenture
effected by this Supplemental Indenture shall be applicable only with respect
to, and govern the terms of, the Notes, which shall not be limited in aggregate
principal amount, and shall not apply to any other Securities that may be issued
under the Indenture unless a supplemental indenture with respect to such other
Securities specifically incorporates such changes, modifications and
supplements. Pursuant to this Supplemental Indenture, there is hereby created
and designated a series of Securities under the Indenture entitled "8.5% Senior
Notes due 2012." The Initial Notes shall be in the form of Exhibit A and the
Exchange Notes shall be in the form of Exhibit B hereto. The Notes shall be
guaranteed by the Guarantors as provided in such form and the Indenture. If
required, the Notes may bear an appropriate legend regarding original issue
discount for federal income tax purposes.

                                   ARTICLE TWO

                               CERTAIN DEFINITIONS

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

                  "Acquired Indebtedness" means (i) with respect to any Person
that becomes a Restricted Subsidiary (or is merged into the Company or any
Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary (or is merged into the Company or any Restricted Subsidiary) that was
not incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary (or being merged into the Company or any Restricted
Subsidiary) and (ii) with respect to the Company or any Restricted Subsidiary,
any Indebtedness expressly assumed by the Company or any Restricted Subsidiary
in connection with the acquisition of any assets from another Person (other than
the Company or any Restricted Subsidiary), which Indebtedness was not incurred
by such other Person in connection with or in contemplation of such acquisition.
Indebtedness incurred in connection with or in contemplation of any transaction
described in clause (i) or (ii) of the preceding sentence shall be deemed to
have been incurred by the Company or a Restricted Subsidiary, as the case may
be, at the time such Person becomes a Restricted Subsidiary (or is merged into
the Company or any Restricted Subsidiary) in the case of clause (i) or at the
time of the acquisition of such assets in the case of clause (ii), but shall not
be deemed Acquired Indebtedness.

<PAGE>
                                       3

                  "Affiliate" means, when used with reference to a specified
Person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.

                  "Affiliate Transaction" has the meaning set forth in Section
3.03 hereof.

                  "Asset Acquisition" means (i) an Investment by the Company or
any Restricted Subsidiary in any other Person if, as a result of such
Investment, such Person shall become a Restricted Subsidiary or shall be
consolidated or merged with or into the Company or any Restricted Subsidiary or
(ii) the acquisition by the Company or any Restricted Subsidiary of the assets
of any Person, which constitute all or substantially all of the assets or of an
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.

                  "Asset Disposition" means any sale, transfer, conveyance,
lease or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback or sale of shares of Capital Stock in any
Subsidiary) (each, a "transaction") by the Company or any Restricted Subsidiary
to any Person of any Property having a fair market value in any transaction or
series of related transactions of at least $10 million. The term "Asset
Disposition" shall not include (i) a transaction between the Company and any
Restricted Subsidiary or a transaction between Restricted Subsidiaries, (ii) a
transaction in the ordinary course of business, including, without limitation,
sales (directly or indirectly), dedications and other donations to governmental
authorities, leases and sales and leasebacks of (A) homes, improved land and
unimproved land and (B) real estate (including related amenities and
improvements), (iii) a transaction involving the sale of Capital Stock of, or
the disposition of assets in, an Unrestricted Subsidiary, (iv) any exchange or
swap of assets of the Company or any Restricted Subsidiary for assets that (x)
are to be used by the Company or any Restricted Subsidiary in the ordinary
course of its Real Estate Business and (y) have a Fair Market Value not less
than the Fair Market Value of the assets exchanged or swapped, (v) any sale,
transfer, conveyance, lease or other disposition of assets and properties of the
Company that is governed by Section 3.08 hereof, or (iv) dispositions of
mortgage loans and related assets and mortgage-backed securities in the ordinary
course of a mortgage lending business.

                  "Attributable Debt" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.

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

                  "Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close.

<PAGE>
                                       4

                  "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the Issue Date, including, without limitation,
all Disqualified Stock and Preferred Stock.

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

                  "Cash Equivalents" means: (a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or any
agency or instrumentality thereof having maturities of one year or less from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, respectively, and in each case maturing within six months
after the date of acquisition; and (f) investments in money market funds
substantially all of the assets of which consist of securities described in the
foregoing clauses (a) through (e).

                  "Change of Control" means (i) any sale, lease or other
transfer (in one transaction or a series of transactions) of all or
substantially all of the consolidated assets of the Company and its Restricted
Subsidiaries to any Person (other than a Restricted Subsidiary); provided,
however, that a transaction where the holders of all classes of Common Equity of
the Company immediately prior to such transaction own, directly or indirectly,
more than 50% of all classes of Common Equity of such Person immediately after
such transaction shall not be a Change of Control; (ii) a "person" or "group"
(within the meaning of Section 13(d) of the Exchange Act (other than (x) the
Company or (y) Donald R. Horton, Terrill J. Horton, or their respective wives,
children, grandchildren and other descendants, or any trust or other entity
formed or controlled by any of such individuals)) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of Common Equity of the
Company representing more than 50% of the voting power of the Common Equity of
the Company; (iii) Continuing Directors cease to constitute at least a majority
of the Board of Directors of the Company; or (iv) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; provided, however, that a liquidation or dissolution of the Company

<PAGE>
                                       5

which is part of a transaction that does not constitute a Change of Control
under the proviso contained in clause (i) above shall not constitute a Change of
Control.

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

                  "Consolidated Adjusted Tangible Assets" of the Company as of
any date means the Consolidated Tangible Assets of the Company and the
Restricted Subsidiaries at the end of the fiscal quarter immediately preceding
the date less any assets securing any Non-Recourse Indebtedness, as determined
in accordance with GAAP.

                  "Consolidated Cash Flow Available for Fixed Charges" means,
for any period, on a consolidated basis for the Company and the Restricted
Subsidiaries, Consolidated Net Income for such period plus (each to the extent
deducted in calculating such Consolidated Net Income and determined in
accordance with GAAP) (a) the sum for such period, without duplication, of (i)
income taxes, (ii) Consolidated Interest Expense, (iii) depreciation and
amortization expenses and other non-cash charges to earnings and (iv) interest
and financing fees and expenses which were previously capitalized and which are
amortized to cost of sales, minus (b) all other non-cash items (other than the
receipt of notes receivable) increasing such Consolidated Net Income.

                  "Consolidated Fixed Charge Coverage Ratio" means, with respect
to any determination date, the ratio of (x) Consolidated Cash Flow Available for
Fixed Charges for the prior four full fiscal quarters (the "Four Quarter
Period") for which financial results have been reported immediately preceding
the determination date (the "Transaction Date"), to (y) the aggregate
Consolidated Interest Incurred for the Four Quarter Period. For purposes of this
definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Interest Incurred" shall be calculated after giving effect on a
pro forma basis for the period of such calculation to (i) the incurrence or the
repayment, repurchase, defeasance or other discharge or the assumption by
another Person that is not an Affiliate (collectively, "repayment") of any
Indebtedness of the Company or any Restricted Subsidiary (and the application of
the proceeds thereof) giving rise to the need to make such calculation, and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), at any time on or after the first day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period, except that Indebtedness
under revolving credit facilities shall be deemed to be the average daily
balance of such Indebtedness during the Four Quarter Period (as reduced on such
pro forma basis by the application of any proceeds of the incurrence of
Indebtedness giving rise to the need to make such calculation); (ii) any Asset

<PAGE>
                                       6

Disposition or Asset Acquisition (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or any Restricted Subsidiary (including any Person that becomes a
Restricted Subsidiary as a result of any such Asset Acquisition) incurring
Acquired Indebtedness at any time on or after the first day of the Four Quarter
Period and on or prior to the Transaction Date), as if such Asset Disposition or
Asset Acquisition (including the incurrence or repayment of any such
Indebtedness) and the inclusion, notwithstanding clause (ii) of the definition
of "Consolidated Net Income," of any Consolidated Cash Flow Available for Fixed
Charges associated with such Asset Acquisition as if it occurred on the first
day of the Four Quarter Period; provided, however, that the Consolidated Cash
Flow Available for Fixed Charges associated with any Asset Acquisition shall not
be included to the extent the net income so associated would be excluded
pursuant to the definition of "Consolidated Net Income," other than clause (ii)
thereof, as if it applied to the Person or assets involved before they were
acquired; and (iii) the Consolidated Cash Flow Available for Fixed Charges and
the Consolidated Interest Incurred attributable to discontinued operations, as
determined in accordance with GAAP, shall be excluded. Furthermore, in
calculating "Consolidated Cash Flow Available for Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on Indebtedness in respect of which a pro
forma calculation is required that is determined on a fluctuating basis as of
the Transaction Date (including Indebtedness actually incurred on the
Transaction Date) and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (2)
notwithstanding clause (1) above, interest on such Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Protection Agreements, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements.

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

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

                  "Consolidated Net Income" for any period means the aggregate
net income (or loss) of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided that there
will be excluded from such net income (loss) (to the extent otherwise included
therein), without duplication: (i) the net income (or loss) of (x) any
Unrestricted Subsidiary (other than a Mortgage Subsidiary) or (y) any Person
(other than a Restricted Subsidiary) in which any Person other than the Company
or any Restricted Subsidiary has an ownership interest, except, in each case, to
the extent that any such income

<PAGE>
                                       7

has actually been received by the Company or any Restricted Subsidiary in the
form of cash dividends or similar cash distributions during such period, which
dividends or distributions are not in excess of the Company's or such Restricted
Subsidiary's (as applicable) pro rata share of such Unrestricted Subsidiary's or
such other Person's net income earned during such period, (ii) except to the
extent includable in Consolidated Net Income pursuant to the foregoing clause
(i), the net income (or loss) of any Person that accrued prior to the date that
(a) such Person becomes a Restricted Subsidiary or is merged with or into or
consolidated with the Company or any of its Restricted Subsidiaries (except, in
the case of an Unrestricted Subsidiary that is redesignated a Restricted
Subsidiary during such period, to the extent of its retained earnings from the
beginning of such period to the date of such redesignation) or (b) the assets of
such Person are acquired by the Company or any Restricted Subsidiary, (iii) the
net income of any Restricted Subsidiary to the extent that (but only so long as)
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of that income is not permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary during
such period, (iv) the gains or losses, together with any related provision for
taxes, realized during such period by the Company or any Restricted Subsidiary
resulting from (a) the acquisition of securities, or extinguishment of
Indebtedness, of the Company or any Restricted Subsidiary or (b) any Asset
Disposition by the Company or any Restricted Subsidiary, (v) any extraordinary
gain or loss together with any related provision for taxes, realized by the
Company or any Restricted Subsidiary and (vi) any non-recurring expense recorded
by the Company or any Restricted Subsidiary in connection with a merger
accounted for as a "pooling-of-interests" transaction; provided, further, that
for purposes of calculating Consolidated Net Income solely as it relates to
clause (iii) of Section 3.03(a) hereof, clause (iv)(b) above shall not be
applicable.

                  "Consolidated Net Worth" of any Person as of any date means
the stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less any
amount attributable to Unrestricted Subsidiaries.

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

                  "Continuing Director" means a director who either was a member
of the Board of Directors of the Company on the date of this Indenture or who
became a director of the

<PAGE>
                                       8

Company subsequent to such date and whose election, or nomination for election
by the Company's stockholders, was duly approved by a majority of the Continuing
Directors on the Board of Directors of the Company at the time of such approval,
either by a specific vote or by approval of the proxy statement issued by the
Company on behalf of the entire Board of Directors of the Company in which such
individual is named as nominee for director.

                  "control", when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

                  "Credit Facilities" means, collectively, each of the credit
facilities and guidance lines of credit of the Company or one or more Restricted
Subsidiaries in existence on the date of this Supplemental Indenture and one or
more other facilities or guidance lines of credit among or between the Company
or one or more Restricted Subsidiaries and one or more lenders pursuant to which
the Company or any Restricted Subsidiary may incur indebtedness for working
capital and general corporate purposes (including acquisitions), as any such
facility or line of credit may amended, restated, supplemented or otherwise
modified from time to time, and includes any agreement extending the maturity
of, increasing the amount of, or restructuring, all or any portion of the
Indebtedness under any such facility or line of credit or any successor
facilities or lines of credit and includes any facility or line of credit with
one or more lenders refinancing or replacing all or any portion of the
Indebtedness under such facility or line of credit or any successor facility or
line of credit.

                  "Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against fluctuations
in currency values.

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

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

                  "Designation Amount" has the meaning provided in the
definition of Unrestricted Subsidiary.

                  "Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Notes or (ii) is convertible into or
exchangeable or

<PAGE>
                                       9

exercisable for (whether at the option of the issuer or the holder thereof) (a)
debt securities or (b) any Capital Stock referred to in (i) above, in each case,
at any time prior to the final maturity date of the Notes provided, however,
that any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof (or the holders of any security into
or for which such Capital Stock is convertible, exchangeable or exercisable) the
right to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a change in control occurring prior to the final maturity date of
the Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to such
holders than Section 3.01 hereof and such Capital Stock specifically provides
that the Company will not repurchase or redeem any such Capital Stock pursuant
to such provisions prior to the Company's repurchase of the Notes as are
required pursuant to Section 3.01 hereof.

                  "Dollars" and "$" mean United States Dollars.

                  "Event of Default" means:

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

                  (2) the failure by the Company to pay the principal or premium
         of any Note when the same becomes due and payable at maturity, upon
         acceleration or otherwise;

                  (3) the failure by the Company or any Restricted Subsidiary to
         comply with any of its agreements or covenants in, or provisions of,
         the Notes, the Guarantees or the Indenture and such failure continues
         for the period and after the notice specified below (except in the case
         of a default under Section 3.01 or 3.08, which will constitute Events
         of Default with notice but without passage of time);

                  (4) the acceleration of any Indebtedness (other than
         Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary
         that has an outstanding principal amount of $25 million or more,
         individually or in the aggregate, and such acceleration does not cease
         to exist, or such Indebtedness is not satisfied, in either case within
         30 days after such acceleration;

                  (5) the failure by the Company or any Restricted Subsidiary to
         make any principal or interest payment in an amount of $25 million or
         more, individually or in the aggregate, in respect of Indebtedness
         (other than Non-Recourse Indebtedness) of the Company or any Restricted
         Subsidiary within 30 days of such principal or interest becoming due
         and payable (after giving effect to any applicable grace period set
         forth in the documents governing such Indebtedness);

<PAGE>
                                       10

                  (6) a final judgment or judgments that exceed $25 million or
         more, individually or in the aggregate, for the payment of money having
         been entered by a court or courts of competent jurisdiction against the
         Company or any of its Restricted Subsidiaries and such judgment or
         judgments is not satisfied, stayed, annulled or rescinded within 60
         days of being entered;

                  (7) the Company or any Restricted Subsidiary that is a
         Significant Subsidiary pursuant to or within the meaning of any
         Bankruptcy Law:

                           (A) commences a voluntary case,

                           (B) consents to the entry of an order for relief
                  against it in an involuntary case,

                           (C) consents to the appointment of a Custodian of it
                  or for all or substantially all of its property, or

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

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

                           (A) is for relief against the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary as
                  debtor in an involuntary case,

                           (B) appoints a Custodian of the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary or a
                  Custodian for all or substantially all of the property of the
                  Company or any Restricted Subsidiary that is a Significant
                  Subsidiary, or

                           (C) orders the liquidation of the Company or any
                  Restricted Subsidiary that is a Significant Subsidiary,

         and the order or decree remains unstayed and in effect for 60 days; or

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

                  "Exchange Notes" has the meaning provided in the Recitals.

<PAGE>
                                       11

                  "Fair Market Value" means, with respect to any asset, the
price (after taking into account any liabilities relating to such assets) that
would be negotiated in an arm's-length transaction for cash between a willing
seller and a willing and able buyer, neither of which is under any compulsion to
complete the transaction, as such price is determined in good faith by the Board
of Directors of the Company or a duly authorized committee thereof, as evidenced
by a resolution of such Board or committee.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.

                  "Guarantors" means (i) initially, on the Issue Date, each of:

                  Allegra, LLC, a California limited liability company;
                  AP LHI, Inc., a California corporation;
                  AP Western GP Corporation, a Delaware corporation;
                  AP WP Operating Corporation, a Delaware corporation;
                  AP WP Partners, L.P., a Delaware limited partnership;
                  APLAM, LLC, a California limited liability company;
                  C. Richard Dobson Builders, Inc., a Virginia corporation;
                  CH Investments of Texas, Inc., a Delaware corporation;
                  CHI Construction Company, an Arizona corporation;
                  CHTEX of Texas, Inc., a Delaware corporation;
                  Continental Homes of Florida, Inc., a Florida corporation;
                  Continental Homes of Texas, L.P., a Texas limited partnership;
                  Continental Homes, Inc., a Delaware corporation;
                  Continental Residential, Inc., a California corporation;
                  D.R. Horton - Emerald, Ltd., a Texas limited partnership;
                  D.R. Horton - Texas, Ltd., a Texas limited partnership;
                  D.R. Horton Los Angeles Holding Company, Inc., a California
                    corporation;
                  D.R. Horton Management Company, Ltd., a Texas limited
                    partnership;
                  D.R. Horton San Diego Holding Company, Inc., a California
                    corporation;
                  D.R. Horton, Inc. - Birmingham, an Alabama corporation;
                  D.R. Horton, Inc. - Chicago, a Delaware corporation;
                  D.R. Horton, Inc. - Denver, a Delaware corporation;
                  D.R. Horton, Inc. - Dietz-Crane, a Delaware corporation;
                  D.R. Horton, Inc. - Greensboro, a Delaware corporation;
                  D.R. Horton, Inc. - Jacksonville, a Delaware corporation;

<PAGE>
                                       12

                  D.R. Horton, Inc. - Louisville, a Delaware corporation;
                  D.R. Horton, Inc. - Minnesota, a Delaware corporation;
                  D.R. Horton, Inc. - New Jersey, a Delaware corporation;
                  D.R. Horton, Inc. - Portland, a Delaware corporation;
                  D.R. Horton, Inc. - Sacramento, a California corporation;
                  D.R. Horton, Inc. - Torrey, a Delaware corporation;
                  D.R. Horton-Schuler Homes, LLC, a Delaware limited liability
                    company;
                  DRH Cambridge Homes, Inc., a California corporation;
                  DRH Cambridge Homes, LLC, a Delaware limited liability
                    company;
                  DRH Construction, Inc., a Delaware corporation;
                  DRH Regrem II, Inc., a Delaware corporation;
                  DRH Regrem III, Inc., a Delaware corporation;
                  DRH Regrem IV, Inc., a Delaware corporation;
                  DRH Regrem V, Inc., a Delaware corporation;
                  DRH Regrem VII, LP, a Texas limited partnership;
                  DRH Regrem VIII, LLC, a Delaware limited liability company;
                  DRH Southwest Construction, Inc., a California corporation;
                  DRH Title Company of Colorado, Inc., a Colorado corporation;
                  DRH Tucson Construction, Inc., a Delaware corporation;
                  DRHI, Inc., a Delaware corporation;
                  HPH Homebuilders 2000 L.P., a California limited partnership;
                  KDB Homes, Inc., a Delaware corporation;
                  LAMCO Housing, Inc., a California corporation;
                  Meadows I, Ltd., a Delaware limited partnership;
                  Meadows II, Ltd., a Delaware limited partnership;
                  Meadows VIII, Ltd., a Delaware limited partnership;
                  Meadows IX, Inc., a New Jersey corporation;
                  Meadows X, Inc., a New Jersey corporation;
                  Melody Homes, Inc., a Delaware corporation;
                  Melmort Co., a Colorado corporation;
                  Porter GP LLC, a Delaware limited liability company;
                  Schuler Homes of Arizona LLC, a Delaware limited liability
                    company;
                  Schuler Homes of California, Inc., a California corporation;
                  Schuler Homes of Oregon, Inc., an Oregon corporation;
                  Schuler Homes of Washington, Inc., a Washington corporation;
                  Schuler Mortgage, Inc., a Delaware corporation;
                  Schuler Realty Hawaii, Inc., a Hawaii corporation;
                  Schuler Realty/Maui, Inc., a Hawaii corporation;
                  SGS Communities at Grande Quay, LLC, a New Jersey limited
                    liability company;
                  SHA Construction LLC, a Delaware limited liability company;

<PAGE>
                                       13

                  SHLR of California, Inc., a California corporation;
                  SHLR of Colorado, Inc., a Colorado corporation;
                  SHLR of Nevada, Inc., a Nevada corporation;
                  SHLR of Utah, Inc., a Utah corporation;
                  SHLR of Washington, Inc., a Washington corporation;
                  SRHI LLC, a Delaware limited liability company;
                  SSHI LLC, a Delaware limited liability company;
                  Vertical Construction Corporation, a Delaware corporation;
                  Western Pacific Funding, Inc., a California corporation;
                  Western Pacific Housing Co., a California corporation;
                  Western Pacific Housing Management, Inc., a California
                    corporation;
                  Western Pacific Housing, Inc., a Delaware corporation;
                  Western Pacific Housing-Antigua, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Aviara, L.P., a California limited
                    partnership;
                  Western Pacific Housing-Boardwalk, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Broadway, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Canyon Park, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Carmel, LLC, a Delaware limited
                  liability company; Western Pacific Housing-Carrillo, LLC, a
                  Delaware limited liability company; Western Pacific
                  Housing-Communications Hill, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Copper Canyon, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Creekside, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Culver City, L.P., a California
                    limited partnership;
                  Western Pacific Housing-Del Valle, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Lomas Verdes, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Lost Hills Park, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-McGonigle Canyon, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Mountaingate, L.P., a California
                    limited partnership;
                  Western Pacific Housing-Norco Estates, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Oso, L.P., a California limited
                    partnership;

<PAGE>
                                       14

                  Western Pacific Housing-Pacific Park II, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Park Avenue East, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Park Avenue West, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Playa Vista, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Poinsettia, L.P., a California limited
                    partnership;
                  Western Pacific Housing-River Ridge, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Robinhood Ridge, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Santa Fe, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Scripps II, LLC, a
                    Delaware limited liability company;
                  Western Pacific Housing-Scripps, L.P., a California limited
                    partnership;
                  Western Pacific Housing-Seacove, L.P., a California limited
                    partnership;
                  Western Pacific Housing-Studio 528, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Terra Bay Duets, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Torrance, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Torrey Commercial, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Torrey Meadows, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Torrey Multi-Family, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Torrey Village Center, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Vineyard Terrace, LLC, a Delaware
                    limited liability company;
                  Western Pacific Housing-Windemere, LLC, a Delaware limited
                    liability company;
                  Western Pacific Housing-Windflower, L.P., a California limited
                    partnership;
                  WPH-Camino Ruiz, LLC, a Delaware limited liability company;
                  WPH-HPH, LLC, a Delaware limited liability company;

<PAGE>
                                       15

and (ii) each of the Company's Subsidiaries which becomes a guarantor of Notes
pursuant to the provisions of the Indenture. An Unrestricted Subsidiary may
become a Guarantor if it (x) is so designated by resolution of the Board of
Directors of the Company and (y) executes a supplemental indenture satisfactory
to the Trustee.

                  "Holder" means the Person in whose name a Note is registered
in the books of the Registrar for the Notes.

                  "incurrence" has the meaning set forth in Section 3.01.

                  "Indebtedness" of any Person means, without duplication, (i)
any liability of such Person (a) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit or similar instrument issued for the benefit of
or surety, performance, completion or payment bonds, earnest money notes or
similar purpose undertakings or indemnifications issued by, such Person in the
ordinary course of business), (b) evidenced by a bond, note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any businesses, properties or assets of any kind or with
services incurred in connection with capital expenditures (other than any
obligation to pay a contingent purchase price which, as of the date of
incurrence thereof is not required to be recorded as a liability in accordance
with GAAP), or (c) in respect of Capitalized Lease Obligations (to the extent of
the Attributable Debt in respect thereof), (ii) any Indebtedness of others that
such Person has guaranteed to the extent of the guarantee, (iii) to the extent
not otherwise included, the obligations of such Person under Currency Agreements
or Interest Protection Agreements to the extent recorded as liabilities not
constituting Interest Incurred, net of amounts recorded as assets in respect of
such agreements, in accordance with GAAP, and (iv) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person; provided, that Indebtedness shall not include
accounts payable, liabilities to trade creditors of such Person or other accrued
expenses arising in the ordinary course of business. The amount of Indebtedness
of any Person at any date shall be (a) the outstanding balance at such date of
all unconditional obligations as described above, net of any unamortized
discount to be accounted for as Interest Expense, in accordance with GAAP, (b)
the maximum liability of such Person for any contingent obligations under clause
(ii) above at such date, net of any unamortized discount to be accounted for as
Interest Expense in accordance with GAAP and (c) in the case of clause (iv)
above, the lesser of (1) the fair market value of any asset subject to a Lien
securing the Indebtedness of others on the date that the Lien attaches and (2)
the amount of the Indebtedness secured.

                  "Indenture" has the meaning provided in the Recitals.

                  "Initial Notes" has the meaning provided in the Recitals.

<PAGE>
                                       16

                  "Initial Purchasers" means Salomon Smith Barney Inc., Banc of
America Securities LLC, Credit Lyonnais Securities (USA) Inc., and Fleet
Securities, Inc.

                  "Intangible Assets" of the Company means all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, write-ups of assets over
their prior carrying value (other than write-ups which occurred prior to the
Issue Date and other than, in connection with the acquisition of an asset, the
write-up of the value of such asset (within one year of its acquisition) to its
fair market value in accordance with GAAP) and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and the
Restricted Subsidiaries prepared in accordance with GAAP.

                  "interest" means, with respect to the Notes, the sum of
interest and any Liquidated Damages on the Notes.

                  "Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other noncash
interest expense other than interest and other charges amortized to cost of
sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of any
Indebtedness.

                  "Interest Incurred" of any Person for any period means,
without duplication, the aggregate amount of (i) Interest Expense and (ii) all
capitalized interest and amortized debt issuance costs.

                  "Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect such
Person or any of its Subsidiaries against fluctuations in interest rates with
respect to Indebtedness permitted to be incurred under this Supplemental
Indenture.

<PAGE>
                                       17

                  "Investment Grade" shall mean BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's.

                  "Investments" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such Person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person and (iv) all other items that would be classified as
investments in any other Person (including, without limitation, purchases of
assets outside the ordinary course of business) on a balance sheet of such
Person prepared in accordance with GAAP.

                  "Issue Date" means the date on which the Notes are originally
issued under this Supplemental Indenture.

                  "Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.

                  "Liquidated Damages" shall have the meaning provided in
paragraph 6 of the Initial Note.

                  "Marketable Securities" means (a) equity securities that are
listed on the New York Stock Exchange, the American Stock Exchange or The Nasdaq
National Market and (b) debt securities that are rated by a nationally
recognized rating agency, listed on the New York Stock Exchange or the American
Stock Exchange or covered by at least two reputable market makers.

                  "Moody's" means Moody's Investors Service, Inc. or any
successor to its debt rating business.

                  "Mortgage Subsidiary" means any Subsidiary of the Company
substantially all of whose operations consist of the mortgage lending business.

                  "Net Cash Proceeds" means, with respect to an Asset
Disposition, cash payments received (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise (including any cash received upon sale or disposition of such note or
receivable), but only as and when received), excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to the Property disposed of in such Asset Disposition
or received in any other non-cash form unless and until such non-cash
consideration is converted into cash

<PAGE>
                                       18

therefrom, in each case, net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state and
local taxes required to be accrued as a liability under GAAP as a consequence of
such Asset Disposition, and in each case net of a reasonable reserve for the
after-tax cost of any indemnification or other payments (fixed and contingent)
attributable to the seller's indemnities or other obligations to the purchaser
undertaken by the Company or any of its Restricted Subsidiaries in connection
with such Asset Disposition, and net of all payments made on any Indebtedness
which is secured by or relates to such Property, in accordance with the terms of
any Lien or agreement upon or with respect to such Property or which must by its
terms or by applicable law be repaid out of the proceeds from such Asset
Disposition, and net of all contractually required distributions and payments
made to minority interest holders in Restricted Subsidiaries or joint ventures
as a result of such Asset Disposition.

                  "Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness. Indebtedness which is otherwise
Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other Person for (i) environmental warranties and indemnities, or (ii)
indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.

                  "Notes" has the meaning provided in the Recitals.

                  "Paying Agent" means the Trustee or any successor paying
agent.

                  "Permitted Indebtedness" means (i) Indebtedness under Credit
Facilities which does not exceed $1.0 billion principal amount outstanding at
any one time; (ii) Indebtedness in respect of obligations of the Company and its
Subsidiaries to the trustees under indentures for debt securities; (iii)
intercompany debt obligations of the Company to any Restricted Subsidiary and of
any Restricted Subsidiary to the Company or any other Restricted Subsidiary;
provided, however, that any Indebtedness of any Restricted Subsidiary or the
Company owed to any Restricted Subsidiary or that ceases to be a Restricted
Subsidiary shall be deemed to be incurred and shall be treated as an incurrence
for purposes of the first paragraph of the covenant described under "Limitations
on Indebtedness" at the time the Restricted Subsidiary in question ceases to be
a Restricted Subsidiary; (iv) Indebtedness of the Company or any Restricted

<PAGE>
                                       19

Subsidiary under any Currency Agreements or Interest Protection Agreements in a
notional amount no greater than the payments due (at the time the related
Currency Agreement or Interest Protection Agreement is entered into) with
respect to the Indebtedness or currency being hedged; (v) Purchase Money
Indebtedness; (vi) Capitalized Lease Obligations; (vii) obligations for, pledge
of assets in respect of, and guaranties of, bond financings of political
subdivisions or enterprises thereof in the ordinary course of business; (viii)
Indebtedness secured only by office buildings owned or occupied by the Company
or any Restricted Subsidiary, which Indebtedness does not exceed $20 million
aggregate principal amount outstanding at any one time; (ix) Indebtedness under
warehouse lines of credit, repurchase agreements and Indebtedness secured by
mortgage loans and related assets of mortgage lending Subsidiaries in the
ordinary course of a mortgage lending business; and (x) Indebtedness of the
Company or any Restricted Subsidiary which, together with all other Indebtedness
under this clause (x), does not exceed $30 million aggregate principal amount
outstanding at any one time.

                  "Permitted Investment" means (i) Cash Equivalents; (ii) any
Investment in the Company or any Restricted Subsidiary or any Person that
becomes a Restricted Subsidiary as a result of such Investment or that is
consolidated or merged with or into, or transfers all or substantially all of
the assets of it or an operating unit or line of business to, the Company or a
Restricted Subsidiary; (iii) any receivables, loans or other consideration taken
by the Company or any Restricted Subsidiary in connection with any asset sale
otherwise permitted by the Indenture; (iv) Investments received in connection
with any bankruptcy or reorganization proceeding, or as a result of foreclosure,
perfection or enforcement of any Lien or any judgment or settlement of any
Person in exchange for or satisfaction of Indebtedness or other obligations or
other property received from such Person, or for other liabilities or
obligations of such Person created, in accordance with the terms of the
Indenture; (v) Investments in Currency Agreements or Interest Protection
Agreements described in the definition of Permitted Indebtedness; (vi) any loan
or advance to an executive officer or director of the Company or any Restricted
Subsidiary made in the ordinary course of business; provided, however, that any
such loan or advance exceeding $1 million shall have been approved by the Board
of Directors of the Company or a committee thereof consisting of disinterested
members; (vii) Investments in joint ventures in a Real Estate Business with
unaffiliated third parties in an aggregate amount at any time outstanding not to
exceed 10% of Consolidated Tangible Assets at such time; (viii) Investments in
interests in issuances of collateralized mortgage obligations, mortgages,
mortgage loan securities or other mortgage related assets; and (ix) Investments
in an aggregate amount outstanding not to exceed $100 million.

                  "Permitted Liens" means (i) Liens for taxes, assessments or
governmental or quasi-government charges or claims that (a) are not yet
delinquent, (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, if required, or (c) encumber solely property
abandoned or in the process of being abandoned, (ii) statutory Liens of

<PAGE>
                                       20

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, if required, (iii) Liens
(other than any Lien imposed by the Employee Retirement Income Security Act of
1974, as amended) incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, (iv) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and appeal
bonds, development obligations, progress payments, government contacts, utility
services, developer's or other obligations to make on-site or off-site
improvements and other obligations of like nature (exclusive of obligations for
the payment of borrowed money but including the items referred to in the
parenthetical in clause (i)(a) of the definition of "Indebtedness"), in each
case incurred in the ordinary course of business of the Company and the
Restricted Subsidiaries, (v) attachment or judgment Liens not giving rise to a
Default or an Event of Default, (vi) easements, dedications, assessment district
or similar liens in connection with municipal or special district financing,
rights-of-way, restrictions, reservations, other similar charges, burdens, and
other similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries,
(vii) zoning restrictions, licenses, restrictions on the use of real property or
minor irregularities in title thereto, which do not materially impair the use of
such real property in the ordinary course of business of the Company and the
Restricted Subsidiaries, (viii) Liens securing Indebtedness incurred pursuant to
clause (viii) or (ix) of the definition of Permitted Indebtedness, (ix) Liens
securing Indebtedness of the Company or any Restricted Subsidiary permitted to
be incurred under the Indenture; provided, that the aggregate amount of all
consolidated Indebtedness of the Company and the Restricted Subsidiaries
(including, with respect to Capitalized Lease Obligations, the Attributable Debt
in respect thereof) secured by Liens (other than Non-Recourse Indebtedness and
Indebtedness incurred pursuant to clause (ix) of the definition of Permitted
Indebtedness) shall not exceed 40% of Consolidated Adjusted Tangible Assets at
any one time outstanding (after giving effect to the incurrence of such
Indebtedness and the use of the proceeds thereof), (x) Liens securing
Non-Recourse Indebtedness of the Company or any Restricted Subsidiary; provided,
that such Liens apply only to the property financed out of the net proceeds of
such Non-Recourse Indebtedness within 90 days after the incurrence of such
Non-Recourse Indebtedness, (xi) Liens securing Purchase Money Indebtedness;
provided that such Liens apply only to the property acquired, constructed or
improved with the proceeds of such Purchase Money Indebtedness within 90 days
after the incurrence of such Purchase Money Indebtedness, (xii) Liens on
property or assets of the Company or any Restricted Subsidiary securing
Indebtedness of the Company or any Restricted Subsidiary owing to the Company or
one or more Restricted Subsidiaries, (xiii) leases or subleases granted to
others not materially interfering with the ordinary course of business of the
Company and the Restricted Subsidiaries, (xiv) purchase money security interests
(including, without limitation, Capitalized Lease

<PAGE>
                                       21

Obligations); provided, that such Liens apply only to the Property acquired and
the related Indebtedness is incurred within 90 days after the acquisition of
such Property, (xv) any right of first refusal, right of first offer, option,
contract or other agreement to sell an asset; provided, that such sale is not
otherwise prohibited under the Indenture, (xvi) any right of a lender or lenders
to which the Company or a Restricted Subsidiary may be indebted to offset
against, or appropriate and apply to the payment of such, Indebtedness any and
all balances, credits, deposits, accounts or money of the Company or a
Restricted Subsidiary with or held by such lender or lenders or its Affiliates,
(xvii) any pledge or deposit of cash or property in conjunction with obtaining
surety, performance, completion or payment bonds and letters of credit or other
similar instruments or providing earnest money obligations, escrows or similar
purpose undertakings or indemnifications in the ordinary course of business of
the Company and its Restricted Subsidiaries, (xviii) Liens for homeowner and
property owner association developments and assessments, (xix) Liens securing
Refinancing Indebtedness; provided, that such Liens extend only to the assets
securing the Indebtedness being refinanced, and (xx) Liens incurred in the
ordinary course of business as security for the obligations of the Company and
its Restricted Subsidiaries with respect to indemnification in respect of title
insurance providers.

                  "Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

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

                  "Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.

                  "Public Equity Offering" means an underwritten public offering
of Common Equity of the Company pursuant to an effective registration statement
filed under the Securities Act (excluding registration statements filed on Form
S-8 or any successor form).

                  "Purchase Money Indebtedness" means Indebtedness of the
Company or any Restricted Subsidiary incurred for the purpose of financing all
or any part of the purchase price, or the cost of construction or improvement,
of any property to be used in the ordinary course of business by the Company and
the Restricted Subsidiaries; provided, however, that (i) the aggregate principal
amount of such Indebtedness shall not exceed such purchase price or cost and
(ii) such Indebtedness shall be incurred no later than 90 days after the
acquisition of such property or completion of such construction or improvement.

                  "Qualified Stock" means Capital Stock of the Company other
than Disqualified Stock.

<PAGE>
                                       22

                  "Rating Agencies" shall mean (1) S&P and (2) Moody's.

                  "Real Estate Business" means homebuilding, housing
construction, real estate development or construction and related real estate
activities, including the provision of mortgage financing or title insurance.

                  "Refinancing Indebtedness" means Indebtedness (to the extent
not Permitted Indebtedness) that refunds, refinances or extends any Indebtedness
of the Company or any Restricted Subsidiary (to the extent not Permitted
Indebtedness) outstanding on the Issue Date or other Indebtedness (to the extent
not Permitted Indebtedness) permitted to be incurred by the Company or any
Restricted Subsidiary pursuant to the terms of this Indenture, but only to the
extent that (i) the Refinancing Indebtedness is subordinated to the Notes or the
Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended or (b) after the maturity date of the Notes,
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the maturity date of the Notes has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred that is equal
to or greater than the Weighted Average Life to Maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the maturity date of the Notes, and (iv) 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.

                  "Registrar" means American Stock Transfer & Trust Company or
any successor registrar of the Notes.

                  "Registration Rights Agreement" means that certain
registration rights agreement by and among the Company, the Guarantors and the
Initial Purchasers dated as of April 11, 2002.

                  "Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution on Capital
Stock of the Company or any Restricted Subsidiary or any payment made to the
direct or indirect holders (in their capacities as such) of Capital Stock of the
Company or any Restricted Subsidiary (other than (a) dividends or distributions
payable solely in Qualified Stock and (b) in the case of Restricted
Subsidiaries, dividends or distributions payable to the Company or to a
Restricted Subsidiary); (ii) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or any Restricted
Subsidiary (other than a payment made to the Company or any Restricted
Subsidiary); and (iii) any Investment (other than any Permitted Investment),
including any Investment in an Unrestricted Subsidiary (including by the
designation of a Subsidiary of the Company as an Unrestricted Subsidiary).

<PAGE>
                                       23

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

                  "S&P" means Standard and Poor's Ratings Group or any successor
to its debt rating business.

                  "Securities" has the meaning provided in the Recitals.

                  "Significant Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the Securities Act and the Exchange Act.

                  "Subsidiary" of any Person means any corporation or other
entity of which a majority of the Capital Stock having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.

                  "Successor" has the meaning set forth in Section 3.08.

                  "Supplemental Indenture" has the meaning provided in the
Preamble.

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

                  "Unrestricted Subsidiary" means any Subsidiary of the Company
so designated by a resolution adopted by the Board of Directors of the Company
or a duly authorized committee thereof as provided below; provided that (a) the
holders of Indebtedness thereof do not have direct or indirect recourse against
the Company or any Restricted Subsidiary, and neither the Company nor any
Restricted Subsidiary otherwise has liability, for any payment obligations in
respect of such Indebtedness (including any undertaking, agreement or instrument
evidencing such Indebtedness), except, (i) in each case, to the extent that the
amount thereof constitutes a Restricted Payment permitted by the Indenture, (ii)
in the case of Non-Recourse Indebtedness, to the extent such recourse or
liability is for the matters discussed in the last sentence of the definition of
"Non-Recourse Indebtedness," or (iii) to the extent such Indebtedness is a
guarantee by such Subsidiary of Indebtedness of the Company or a Restricted
Subsidiary and (b) no holder of any Indebtedness of such Subsidiary shall have a
right to declare a default on such Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity as a result of a default
on any Indebtedness of the Company or any Restricted Subsidiary. Subject to the
foregoing, the Board of Directors of the Company or a duly authorized committee
thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided,
however, that (i) the net amount (the "Designation Amount") then outstanding of
all

<PAGE>
                                       24

previous Investments by the Company and the Restricted Subsidiaries in such
Subsidiary will be deemed to be a Restricted Payment at the time of such
designation and will reduce the amount available for Restricted Payments under
Section 3.03 hereof, to the extent provided therein, (ii) the Company must be
permitted under Section 3.03 hereof to make the Restricted Payment deemed to
have been made pursuant to clause (i), and (iii) after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. In accordance with the foregoing, and not in limitation thereof,
Investments made by any Person in any Subsidiary of such Person prior to such
Person's merger with the Company or any Restricted Subsidiary (but not in
contemplation or anticipation of such merger) shall not be counted as an
Investment by the Company or such Restricted Subsidiary if such Subsidiary of
such Person is designated as an Unrestricted Subsidiary. The Board of Directors
of the Company or a duly authorized committee thereof may also redesignate an
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
(i) the Indebtedness of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred under Section 3.02 hereof and (ii)
immediately after giving effect to such redesignation and the incurrence of any
such additional Indebtedness, the Company and the Restricted Subsidiaries could
incur $1.00 of additional Indebtedness under Section 3.02(a) hereof. Any such
designation or redesignation by the Board of Directors of the Company or a
committee thereof will be evidenced to the Trustee by the filing with the
Trustee of a certified copy of the resolution of the Board of Directors of the
Company or a committee thereof giving effect to such designation or
redesignation and an Officers' Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the
underlying calculations of such Officers' Certificate. The designation of any
Person as an Unrestricted Subsidiary shall be deemed to include a designation of
all Subsidiaries of such Person as Unrestricted Subsidiaries; provided, however,
that the ownership of the general partnership interest (or a similar member's
interest in a limited liability company) by an Unrestricted Subsidiary shall not
cause a Subsidiary of the Company of which more than 95% of the equity interest
is held by the Company or one or more Restricted Subsidiaries to be deemed an
Unrestricted Subsidiary.

                  "Weighted Average Life to Maturity" means, when applied to any
Indebtedness or portion thereof at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payment of principal, including, without limitation, payment at final maturity,
in respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (ii) the sum of all such payments described in clause (i)(a) above.

<PAGE>
                                       25

                                  ARTICLE THREE

                                    COVENANTS

Section 3.01. Repurchase of Notes upon Change of Control.

                  (a) In the event that there shall occur a Change of Control,
each Holder of Notes shall have the right, at such Holder's option, to require
the Company to purchase all or any part of such Holder's Notes on a date (the
"Repurchase Date") that is no later than 90 days after notice of the Change of
Control, at 101% of the principal amount thereof plus accrued interest to the
Repurchase Date.

                  (b) On or before the thirtieth day after any Change of
Control, the Company is obligated to mail, or cause to be mailed, to all Holders
of record of Notes a notice regarding the Change of Control and the repurchase
right. The notice shall state the Repurchase Date, the date by which the
repurchase right must be exercised, the price for the Notes and the procedure
which the Holder must follow to exercise such right. To exercise such right, the
Holder of such Note must deliver at least ten days prior to the Repurchase Date
written notice to the Company (or an agent designated by the Company for such
purpose) of the Holder's exercise of such right, together with the Note with
respect to which the right is being exercised, duly endorsed for transfer;
provided, however, that if mandated by applicable law, a Holder may be permitted
to deliver such written notice nearer to the Repurchase Date than may be
specified by the Company.

                  (c) The Company will comply with applicable law, including
Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable, if
the Company is required to give a notice of right of repurchase as a result of a
Change of Control.

Section 3.02. Limitations on Indebtedness.

                  (a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary,
directly or indirectly, to, create, incur, assume, become liable for or
guarantee the payment of (collectively, an "incurrence") any Indebtedness
(including Acquired Indebtedness) unless, after giving effect thereto and the
application of the proceeds therefrom, the Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least 2.0 to 1.0.

                  (b) Notwithstanding the foregoing, the provisions of this
Supplemental Indenture will not prevent the incurrence of: (i) Permitted
Indebtedness, (ii) Refinancing Indebtedness, (iii) Non-Recourse Indebtedness,
(iv) any Guarantee of Indebtedness of the Company

<PAGE>
                                       26

represented by the Notes and (v) any guarantee of Indebtedness incurred under
Credit Facilities in compliance with this Indenture.

                  (c) For purposes of determining compliance with this covenant,
in the event that an item of Indebtedness may be incurred through the first
paragraph of this covenant or by meeting the criteria of one or more of the
types of Indebtedness described in the second paragraph of this covenant (or the
definitions of the terms used therein), the Company, in its sole discretion, (i)
may classify such item of Indebtedness under and comply with either of such
paragraphs (or any of such definitions), as applicable, (ii) may classify and
divide such item of Indebtedness into more than one of such paragraphs (or
definitions), as applicable, and (iii) may elect to comply with such paragraphs
(or definitions), as applicable, in any order.

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

Section 3.03. Limitations on Restricted Payments.

                  (a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment unless:

                  (i) no Default or Event of Default shall have occurred and be
         continuing at the time of or immediately after giving effect to such
         Restricted Payment;

                  (ii) immediately after giving effect to such Restricted
         Payment, the Company could incur at least $1.00 of Indebtedness
         pursuant to Section 3.02(a) hereof; and

                 (iii) immediately after giving effect to such Restricted
         Payment, the aggregate amount of all Restricted Payments (including the
         Fair Market Value of any non-cash Restricted Payment) declared or made
         after the Issue Date does not exceed the sum of (a) 50% of the
         Consolidated Net Income of the Company on a cumulative basis during the
         period (taken as one accounting period) from and including April 1,
         1998 and ending on the last day of the Company's fiscal quarter
         immediately preceding the date of such Restricted Payment (or in the
         event such Consolidated Net Income shall be a deficit, minus 100% of
         such deficit), plus (b) 100% of the aggregate net cash

<PAGE>
                                       27

         proceeds of and the fair market value of Property received by the
         Company from (1) any capital contribution to the Company after June 9,
         1997 or any issue or sale after June 9, 1997 of Qualified Stock (other
         than to any Subsidiary of the Company) and (2) the issue or sale after
         June 9, 1997 of any Indebtedness or other securities of the Company
         convertible into or exercisable for Qualified Stock of the Company that
         have been so converted or exercised, as the case may be, plus (c) $86.0
         million, which is equal to the aggregate principal amount of the
         Company's 6-7/8% Convertible Subordinated Notes due 2002 that were
         converted into the Company's Common Equity prior to the Issue Date,
         plus (d) in the case of the disposition or repayment of any Investment
         constituting a Restricted Payment made after the June 9, 1997, an
         amount (to the extent not included in the calculation of the
         Consolidated Net Income referred to in (a)) equal to the lesser of (x)
         the return of capital with respect to such Investment (including by
         dividend, distribution or sale of Capital Stock) and (y) the amount of
         such Investment that was treated as a Restricted Payment, in either
         case, less the cost of the disposition or repayment of such Investment
         (to the extent not included in the calculation of the Consolidated Net
         Income referred to in (a)), plus (e) with respect to any Unrestricted
         Subsidiary that is redesignated as a Restricted Subsidiary after June
         9, 1997 in accordance with the definition of Unrestricted Subsidiary
         (so long as the designation of such Subsidiary as an Unrestricted
         Subsidiary was treated as a Restricted Payment made after June 9, 1997
         and only to the extent not included in the calculation of the
         Consolidated Net Income referred to in (a)), an amount equal to the
         lesser of (x) the proportionate interest of the Company or a Restricted
         Subsidiary in an amount equal to the excess of (I) the total assets of
         such Subsidiary, valued on an aggregate basis at the lesser of book
         value and Fair Market Value thereof, over (II) the total liabilities of
         such Subsidiary, determined in accordance with GAAP, and (y) the
         Designation Amount at the time of such Subsidiary's designation as an
         Unrestricted Subsidiary, plus (f) $50 million minus (g) the aggregate
         amount of all Restricted Payments (other than Restricted Payments
         referred to in clause (C) of the immediately succeeding paragraph) made
         after June 9, 1997 through the Issue Date.

                  (b) Clauses (ii) and (iii) of paragraph (a) will not prohibit:
(A) the payment of any dividend within 60 days of its declaration if such
dividend could have been made on the date of its declaration without violation
of the provisions of this Indenture; (B) the repurchase, redemption or
retirement of any shares of Capital Stock of the Company in exchange for, or out
of the net proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of Qualified Stock; and (C) the
purchase, redemption or other acquisition, cancellation or retirement for value
of Capital Stock, or options, warrants, equity appreciation rights or other
rights to purchase or acquire Capital Stock, of the Company or any Subsidiary
held by officers or employees or former officers or employees of the Company or
any Subsidiary (or their estates or beneficiaries under their estates) not to
exceed $20 million in the aggregate since the Issue Date; provided, however,
that each Restricted Payment described

<PAGE>
                                       28

in clauses (A) and (B) of this sentence shall be taken into account for purposes
of computing the aggregate amount of all Restricted Payments pursuant to clause
(iii) of paragraph (a).

                  (c) For purposes of determining the aggregate and
permitted amounts of Restricted Payments made, the amount of any guarantee of
any Investment in any Person that was initially treated as a Restricted Payment
and which was subsequently terminated or expired, net of any amounts paid by the
Company or any Restricted Subsidiary in respect of such guarantee, shall be
deducted.

                  (d) In determining the "fair market value of Property"
for purposes of clause (iii) of the paragraph (a), Property other than cash,
Cash Equivalents and Marketable Securities shall be deemed to be equal in value
to the "equity value" of the Capital Stock or other securities issued in
exchange therefor. The "equity value" of such Capital Stock or other securities
shall be equal to (i) the number of shares of Common Equity issued in the
transaction (or issuable upon conversion or exercise of the Capital Stock or
other securities issued in the transaction) multiplied by the closing sale price
of the Common Equity on its principal market on the date of the transaction
(less, in the case of Capital Stock or other securities which require the
payment of consideration at the time of conversion or exercise, the aggregate
consideration payable thereupon) or (ii) if the Common Equity is not then traded
on the New York Stock Exchange, American Stock Exchange or Nasdaq National
Market, or if the Capital Stock or other securities issued in the transaction do
not consist of Common Equity (or Capital Stock or other securities convertible
into or exercisable for Common Equity), the value of such Capital Stock or other
securities as determined by a nationally recognized investment banking firm
retained by the Board of Directors of the Company.

Section 3.04. Limitations on Transactions with Affiliates.

                  (a) Until the Notes are rated Investment Grade by both
Rating Agencies (after which time the following covenant will no longer be in
effect), the Company will not, and will not cause or permit any Restricted
Subsidiary to, make any loan, advance, guarantee or capital contribution to, or
for the benefit of, or sell, lease, transfer or otherwise dispose of any
property or assets to, or for the benefit of, or purchase or lease any property
or assets from, or enter into or amend any contract, agreement or understanding
with, or for the benefit of, any Affiliate of the Company or any Affiliate of
any of the Company's Subsidiaries or any holder of 10% or more of the Common
Equity of the Company (including any Affiliates of such holders), in a single
transaction or series of related transactions (each, an "Affiliate
Transaction"), except for any Affiliate Transaction the terms of which are at
least as favorable as the terms which could be obtained by the Company or such
Restricted Subsidiary, as the case may be, in a comparable transaction made on
an arm's length basis with Persons who are not such a holder, an Affiliate of
such a holder or an Affiliate of the Company or any of the Company's
Subsidiaries.

<PAGE>
                                       29

                  (b) In addition, the Company will not, and will not cause
or permit any Restricted Subsidiary to, enter into an Affiliate Transaction
unless (i) with respect to any such Affiliate Transaction involving or having a
value of more than $10 million, the Company shall have (x) obtained the approval
of a majority of the Board of Directors of the Company and (y) either obtained
the approval of a majority of the Company's disinterested directors or obtained
an opinion of a qualified independent financial advisor to the effect that such
Affiliate Transaction is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view and (ii) with respect to any
such Affiliate Transaction involving or having a value of more than $50 million,
the Company shall have (x) obtained the approval of a majority of the Board of
Directors of the Company and (y) delivered to the Trustee an opinion of a
qualified independent financial advisor to the effect that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.

                  (c) Notwithstanding the foregoing, an Affiliate Transaction
will not include (i) any contract, agreement or understanding with, or for the
benefit of, or plan for the benefit of employees of the Company or its
Subsidiaries generally (in their capacities as such) that has been approved by
the Board of Directors of the Company, (ii) Capital Stock issuances to
directors, officers and employees of the Company or its Subsidiaries pursuant to
plans approved by the stockholders of the Company, (iii) any Restricted Payment
otherwise permitted under Section 3.03, (iv) any transaction between or among
the Company and one or more Restricted Subsidiaries or between or among
Restricted Subsidiaries (provided, however, no such transaction shall involve
any other Affiliate of the Company (other than an Unrestricted Subsidiary to the
extent the applicable amount constitutes a Restricted Payment permitted by this
Indenture)) and (v) any transaction between one or more Restricted Subsidiaries
and one or more Unrestricted Subsidiaries where all of the payments to, or other
benefits conferred upon, such Unrestricted Subsidiaries are substantially
contemporaneously dividended, or otherwise distributed or transferred without
charge, to the Company or a Restricted Subsidiary.

Section 3.05. Limitations on Dispositions of Assets.

                  Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary to,
make any Asset Disposition unless (x) the Company (or such Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Disposition at least equal to the Fair Market Value thereof, and (y) not less
than 70% of the consideration received by the Company (or such Restricted
Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and
Marketable Securities. The amount of any Indebtedness (other than any
Indebtedness subordinated to the Notes) of the Company or any Restricted
Subsidiary that is actually assumed by the transferee in such Asset Disposition
shall be deemed to be consideration required by clause (y) above for purposes of
determining the percentage of such consideration received by the Company or the
Restricted Subsidiaries.

<PAGE>
                                       30

The Net Cash Proceeds of an Asset Disposition shall, within one year, at the
Company's election, (a) be used by the Company or a Restricted Subsidiary in the
business of the construction and sale of homes conducted by the Company and the
Restricted Subsidiaries or any other business of the Company or a Restricted
Subsidiary existing at the time of such Asset Disposition or (b) to the extent
not so used, be applied to make a Net Cash Proceeds Offer for the Notes and, if
the Company or a Restricted Subsidiary elects or is required to do so, repay,
purchase or redeem any other unsubordinated Indebtedness (on a pro rata basis if
the amount available for such repayment, purchase or redemption is less than the
aggregate amount of (i) the principal amount of the Notes tendered in such Net
Cash Proceeds Offer and (ii) the lesser of the principal amount, or accreted
value, of such other unsubordinated Indebtedness, plus, in each case accrued
interest to the date of repayment, purchase or redemption) at 100% of the
principal amount or accreted value thereof, as the case may be, plus accrued
interest to the date of repurchase or repayment. Notwithstanding the foregoing,
(A) the Company will not be required to apply such Net Cash Proceeds to the
repurchase of Notes in accordance with clause (b) of the preceding sentence
except to the extent that such Net Cash Proceeds, together with the aggregate
Net Cash Proceeds of prior Asset Dispositions (other than those so used) which
have not been applied in accordance with this provision and as to which no prior
Net Cash Proceeds Offer shall have been made, exceed 5% of Consolidated Tangible
Assets and (B) in connection with any Asset Disposition, the Company and the
Restricted Subsidiaries will not be required to comply with the requirements of
clause (y) of the first sentence of this paragraph to the extent that the
aggregate non-cash consideration received in connection with such Asset
Disposition, together with the sum of all non-cash consideration received in
connection with all prior Asset Dispositions that has not yet been converted
into cash, does not exceed 5% of Consolidated Tangible Assets; provided,
however, that when any non-cash consideration is converted into cash, such cash
shall constitute Net Cash Proceeds and be subject to the preceding sentence.

Section 3.06. Limitations on Liens.

                  The Company will not, and will not cause or permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Liens,
other than Permitted Liens, on any of its Property, or on any shares of Capital
Stock or Indebtedness of any Restricted Subsidiary, unless contemporaneously
therewith or prior thereto all payments due under this Indenture and the Notes
are secured on an equal and ratable basis with the obligation or liability so
secured until such time as such obligation or liability is no longer secured by
a Lien.

Section 3.07. Limitations on Restrictions Affecting Restricted Subsidiaries.

                  The Company will not, and will not cause or permit any
Restricted Subsidiary to, create, assume or otherwise cause or suffer to exist
or become effective any consensual

<PAGE>
                                       31

encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions of leases and other
agreements that restrict the assignability thereof) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any other Restricted Subsidiary, or pay
interest on or principal of any Indebtedness owed to the Company or any other
Restricted Subsidiary, (ii) make loans or advances to the Company or any other
Restricted Subsidiary, or (iii) transfer any of its properties or assets to the
Company or any other Restricted Subsidiary, except for (a) encumbrances or
restrictions existing under or by reason of applicable law, (b) covenants or
restrictions contained in Indebtedness in effect on the date of this Indenture
as such covenants or restrictions are in effect on such date, (c) any
restrictions or encumbrances arising under Acquired Indebtedness; provided, that
such encumbrance or restriction applies only to either the assets that were
subject to the restriction or encumbrance at the time of the acquisition or the
obligor on such Indebtedness and its Subsidiaries, (d) any restrictions or
encumbrances arising in connection with Refinancing Indebtedness; provided,
however, that any restrictions and encumbrances of the type described in this
clause (d) that arise under such Refinancing Indebtedness shall not be
materially more restrictive than those under the agreement creating or
evidencing the Indebtedness being refunded, refinanced, replaced or extended,
(e) any Permitted Lien, or any other agreement restricting the sale or other
disposition of property, securing Indebtedness permitted by this Indenture if
such Permitted Lien or agreement does not expressly restrict the ability of a
Subsidiary of the Company to pay dividends or make or repay loans or advances
prior to default thereunder, (f) reasonable and customary borrowing base
covenants set forth in agreements evidencing Indebtedness otherwise permitted by
this Indenture, (g) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Company or any Restricted
Subsidiary, and (h) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition.

Section 3.08. Limitations on Mergers, Consolidations and Sales of Assets.

                  Neither the Company nor any Guarantor will consolidate or
merge with or into, or sell, lease, convey or otherwise dispose of all or
substantially all of its assets (including, without limitation, by way of
liquidation or dissolution), or assign any of its obligations under the Notes,
the Guarantees or this Indenture (as an entirety or substantially in one
transaction or in a series of related transactions), to any Person (in each case
other than in a transaction in which the Company or a Restricted Subsidiary is
the survivor of a consolidation or merger, or the transferee in a sale, lease,
conveyance or other disposition) unless: (i) the Person formed by or surviving
such consolidation or merger (if other than the Company or the Guarantor, as the
case may be), or to which such sale, lease, conveyance or other disposition or
assignment will

<PAGE>
                                       32

be made (collectively, the "Successor"), is a corporation or other legal entity
organized and existing under the laws of the United States or any state thereof
or the District of Columbia, and the Successor assumes by supplemental indenture
in a form reasonably satisfactory to the Trustee all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes or a Guarantee, as
the case may be, and the Indenture, (ii) immediately after giving effect to such
transaction, no Default or Event of Default has occurred and is continuing,
(iii) immediately after giving effect to such transaction and the use of any net
proceeds therefrom, on a pro forma basis, the Consolidated Net Worth of the
Company or the Successor (in the case of a transaction involving the Company),
as the case may be, would be at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction (exclusive of any adjustments to
Consolidated Net Worth attributable to transaction costs) less any amount
treated as a Restricted Payment in connection with such transaction in
accordance with this Indenture and (iv) unless prior to such transaction the
Notes are rated Investment Grade by both Rating Agencies (after which this
clause (iv) shall not apply), immediately after giving effect to such
transaction, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 3.02(a) hereof. The foregoing provisions shall not apply to (i) a
transaction involving the sale or disposition of Capital Stock of a Guarantor,
or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or
other disposition of all or substantially all of the assets of a Guarantor, that
in any such case results in such Guarantor being released from its Guarantee
pursuant to the Indenture or (ii) a transaction the purpose of which is to
change the state of incorporation of the Company or any Guarantor.

Section 3.09. Reports to Holders of Notes.

                  The Company will file with the Commission the annual reports
and the information, documents and other reports required to be filed pursuant
to Section 13 or 15(d) of the Exchange Act. The Company will file with the
Trustee and mail to each Holder of record of Notes such reports, information and
documents within 15 days after it files them with the Commission. In the event
that the Company is no longer subject to these periodic requirements of the
Exchange Act, it will nonetheless continue to file reports with the Commission
and the Trustee and mail such reports to each Holder of Notes as if it were
subject to such reporting requirements. Regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company will cause its consolidated financial statements and a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" written report, similar to those that would have been required to
appear in annual or quarterly reports, to be delivered to Holders of Notes.

<PAGE>
                                       33

                                  ARTICLE FOUR

                                  MISCELLANEOUS

Section 4.01. Governing Law.

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

Section 4.02. No Adverse Interpretation of Other Agreements.

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

Section 4.03. No Recourse Against Others.

                  All liability described in paragraph 13 of the Initial Note
and paragraph 12 of the Exchange Note of any director, officer, employee or
stockholder, as such, of the Company or any Guarantor is waived and released.

Section 4.04. Successors and Assigns.

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

Section 4.05. Duplicate Originals.

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

Section 4.06. Severability.

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

                            [Signature Pages Follow]

<PAGE>

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

                                D.R. HORTON, INC.

                                By: /s/ SAMUEL R. FULLER
                                   ---------------------------------------------
                                   Samuel R. Fuller
                                   Executive Vice President, Treasurer and
                                   Chief Financial Officer

                                      S-1
<PAGE>

AMERICAN STOCK TRANSFER & TRUST
 COMPANY, as Trustee

By: /s/ HERBERT J. LEMMER
   -----------------------------------
   Name:  Herbert J. Lemmer
   Title: Vice President

                                      S-2
<PAGE>

                           GUARANTORS:

                           C. RICHARD DOBSON BUILDERS, INC.
                           CHI CONSTRUCTION COMPANY
                           CHTEX OF TEXAS, INC.
                           CONTINENTAL HOMES, INC.
                           CONTINENTAL HOMES OF FLORIDA, INC.
                           CONTINENTAL RESIDENTIAL, INC.
                           D.R. HORTON, INC. - BIRMINGHAM
                           D.R. HORTON, INC. - CHICAGO
                           D.R. HORTON, INC. - DENVER
                           D.R. HORTON, INC. - DIETZ-CRANE
                           D.R. HORTON, INC. - GREENSBORO
                           D.R. HORTON, INC. - JACKSONVILLE
                           D.R. HORTON, INC. - LOUISVILLE
                           D.R. HORTON, INC. - MINNESOTA
                           D.R. HORTON, INC. - NEW JERSEY
                           D.R. HORTON, INC. - PORTLAND
                           D.R. HORTON, INC. - SACRAMENTO
                           D.R. HORTON, INC. - TORREY
                           D.R. HORTON LOS ANGELES HOLDING COMPANY, INC.
                           D.R. HORTON SAN DIEGO HOLDING COMPANY, INC.
                           DRH CAMBRIDGE HOMES, INC.
                           DRH CONSTRUCTION, INC.
                           DRH REGREM II, INC.
                           DRH REGREM III, INC.
                           DRH REGREM IV, INC.
                           DRH REGREM V, INC.
                           DRH SOUTHWEST CONSTRUCTION, INC.
                           DRH TITLE COMPANY OF COLORADO, INC.
                           DRH TUCSON CONSTRUCTION, INC.
                           DRHI, INC.
                           KDB HOMES, INC.
                           MEADOWS I, LTD.
                           MEADOWS VIII, LTD.
                           MEADOWS IX, INC.
                           MEADOWS X, INC.

                           By:   /s/ SAMUEL R. FULLER
                               -------------------------------------------------
                               Samuel R. Fuller
                               Treasurer

First Supplemental Indenture          S-3
<PAGE>

                           CH INVESTMENTS OF TEXAS, INC.
                           MEADOWS II, LTD.

                           By:    /s/ WILLIAM PECK
                                ------------------------------------------------
                                William Peck
                                President

First Supplemental Indenture          S-4
<PAGE>

                           CONTINENTAL HOMES OF TEXAS, L.P.

                           By:   CHTEX of Texas, Inc., its general partner

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller, Treasurer

                           D.R. HORTON MANAGEMENT COMPANY, LTD.
                           D.R. HORTON - EMERALD, LTD.
                           D.R. HORTON - TEXAS, LTD.
                           DRH REGREM VII, LP

                           By:   Meadows I, Ltd., its general partner

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller
                                     Treasurer

                           SGS COMMUNITIES AT GRANDE QUAY, LLC

                           By:   Meadows IX, Inc., a member

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller
                                     Treasurer

                           and

                           By:   Meadows X, Inc., a member

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller
                                     Treasurer

                           DRH CAMBRIDGE HOMES, LLC
                           DRH REGREM VIII, LLC

                           By:   D.R. Horton, Inc. - Chicago, a member

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller
                                     Treasurer

First Supplemental Indenture          S-5
<PAGE>

                           ALLEGRA, LLC
                           APLAM, LLC
                           WESTERN PACIFIC HOUSING CO.
                           WESTERN PACIFIC HOUSING-ANTIGUA, LLC
                           WESTERN PACIFIC HOUSING-AVIARA, L.P.
                           WESTERN PACIFIC HOUSING-BOARDWALK, LLC
                           WESTERN PACIFIC HOUSING-BROADWAY, LLC
                           WESTERN PACIFIC HOUSING-CANYON PARK, LLC
                           WESTERN PACIFIC HOUSING-CARMEL, LLC
                           WESTERN PACIFIC HOUSING-CARRILLO, LLC
                           WESTERN PACIFIC HOUSING-COMMUNICATIONS HILL, LLC
                           WESTERN PACIFIC HOUSING-CREEKSIDE, LLC
                           WESTERN PACIFIC HOUSING-CULVER CITY, L.P.
                           WESTERN PACIFIC HOUSING-LOMAS VERDES, LLC
                           WESTERN PACIFIC HOUSING-LOST HILLS PARK, LLC
                           WESTERN PACIFIC HOUSING-MCGONIGLE CANYON, LLC
                           WESTERN PACIFIC HOUSING-MOUNTAINGATE, L.P.
                           WESTERN PACIFIC HOUSING-NORCO ESTATES, LLC
                           WESTERN PACIFIC HOUSING-OSO, L.P.
                           WESTERN PACIFIC HOUSING-PARK AVENUE EAST, LLC
                           WESTERN PACIFIC HOUSING-PARK AVENUE WEST, LLC
                           WESTERN PACIFIC HOUSING-PLAYA VISTA, LLC
                           WESTERN PACIFIC HOUSING-ROBINHOOD RIDGE, LLC
                           WESTERN PACIFIC HOUSING-SANTA FE, LLC
                           WESTERN PACIFIC HOUSING-SCRIPPS II, LLC
                           WESTERN PACIFIC HOUSING-SCRIPPS, L.P.
                           WESTERN PACIFIC HOUSING-SEACOVE, L.P.
                           WESTERN PACIFIC HOUSING-STUDIO 528, LLC
                           WESTERN PACIFIC HOUSING-TERRA BAY DUETS, LLC
                           WESTERN PACIFIC HOUSING-TORRANCE, LLC
                           WESTERN PACIFIC HOUSING-TORREY COMMERCIAL, LLC
                           WESTERN PACIFIC HOUSING-TORREY MEADOWS, LLC
                           WESTERN PACIFIC HOUSING-TORREY MULTI-FAMILY, LLC
                           WESTERN PACIFIC HOUSING-TORREY VILLAGE CENTER, LLC
                           WESTERN PACIFIC HOUSING-VINEYARD TERRACE, LLC
                           WESTERN PACIFIC HOUSING-WINDEMERE, LLC
                           WESTERN PACIFIC HOUSING-WINDFLOWER, L.P.
                           WPH-CAMINO RUIZ, LLC
                           WPH-HPH, LLC

                           By:   LAMCO Housing, Inc.,
                                 its Member or General Partner

                                 By:  /s/ SAMUEL R. FULLER
                                     -------------------------------------------
                                     Samuel R. Fuller
                                     Vice President

First Supplemental Indenture          S-6
<PAGE>

                           SCHULER HOMES OF ARIZONA LLC
                           SHA CONSTRUCTION LLC

                           By:      SRHI LLC,
                                    its Member

                                    By:     SLHR of Nevada, Inc.,
                                            its Member

                                            By:     /s/ SAMUEL R. FULLER
                                                   -----------------------------
                                                   Samuel R. Fuller
                                                   Vice President

                           HPH HOMEBUILDERS 2000 L.P.
                           PORTER GP LLC

                           By:      WPH-HPH, LLC,
                                    its General Partner or Member

                                    By:     LAMCO Housing, Inc.,
                                            its Member

                                            By:     /s/ SAMUEL R. FULLER
                                                   -----------------------------
                                                   Samuel R. Fuller
                                                   Vice President

                           AP LHI, INC.
                           AP WESTERN GP CORPORATION
                           AP WP OPERATING CORPORATION
                           LAMCO HOUSING, INC.
                           MELODY HOMES, INC.
                           MELMORT CO.
                           SCHULER HOMES OF CALIFORNIA, INC.
                           SCHULER HOMES OF OREGON, INC.
                           SCHULER HOMES OF WASHINGTON, INC.
                           SCHULER MORTGAGE, INC.
                           SCHULER REALTY HAWAII, INC.
                           SCHULER REALTY/MAUI, INC.
                           SHLR OF CALIFORNIA, INC.
                           SHLR OF COLORADO, INC.
                           SHLR OF NEVADA, INC.
                           SHLR OF UTAH, INC.
                           SHLR OF WASHINGTON, INC.
                           VERTICAL CONSTRUCTION CORPORATION
                           WESTERN PACIFIC FUNDING, INC.
                           WESTERN PACIFIC HOUSING MANAGEMENT, INC.
                           WESTERN PACIFIC HOUSING, INC.

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

First Supplemental Indenture          S-7
<PAGE>

                           D.R. HORTON-SCHULER HOMES, LLC

                           By:   Vertical Construction Corporation,
                                 its Manager

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

                           SRHI LLC

                           By:   SHLR of Nevada, Inc.,
                                 its Member

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

                           SSHI LLC

                           By:   SHLR of Washington, Inc.,
                                 its Member

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

                           WESTERN PACIFIC HOUSING-COPPER CANYON, LLC
                           WESTERN PACIFIC HOUSING-PACIFIC PARK II, LLC
                           WESTERN PACIFIC HOUSING-POINSETTIA, L.P.
                           WESTERN PACIFIC HOUSING-DEL VALLE, LLC

                           By:   AP Western GP Corporation,
                                 its Member or General Partner

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

                           WESTERN PACIFIC HOUSING-RIVER RIDGE, LLC

                           By:   AP LHI, Inc.,
                                 its Member

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

                           AP WP PARTNERS, L.P.

                           By:   AP WP Operating Corporation,
                                 its General Partner

                           By:    /s/ SAMUEL R. FULLER
                                 -----------------------------------------------
                                 Samuel R. Fuller
                                 Vice President

First Supplemental Indenture          S-8
<PAGE>

                                                                       EXHIBIT A

NO.                                                           CUSIP NO.:
                                                                         -------

                           8.5% SENIOR NOTES DUE 2012

                                D.R. HORTON, INC.
                             A DELAWARE CORPORATION

promises to pay to

or registered assigns
the principal sum of                             Dollars on April 15, 2012

8.5% Senior Notes Due 2012
Interest Payment Dates:  April 15 and October 15, commencing October 15, 2002.
Record Dates:  April 1 and October 1.

Authenticated:                          Dated:

                                        D.R. HORTON, INC.

                                        [Seal]

                                        By
                                              ----------------------------------
                                              Title:

                                        By
                                              ----------------------------------
                                              Title:

American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the Notes
referred to in the within mentioned Indenture.

By:
   -----------------------------------------
          Authorized Signatory

                                      A-1
<PAGE>

                                D.R. HORTON, INC.

                           8.5% SENIOR NOTES DUE 2012

1. Interest.

                  D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company will pay interest semiannually on April 15 and
October 15 of each year, commencing October 15, 2002, until the principal is
paid or made available for payment. Interest on the Notes will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from April 11, 2002, provided that, if there is no
existing default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 immediately preceding the interest payment date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.

3. Paying Agent and Registrar.

                  Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.

4. Indenture.

                  The Company issued the Notes under an Indenture dated as of
April 11, 2002, as supplemented ("Indenture"), among the Company, the Guarantors
and the Trustee. The terms of the Notes and the Guarantees include those stated
in the Indenture and those made part of the Indenture (including those terms set
forth in the Authorizing Resolution or supplemental indenture pertaining to the
Securities of the Series of which this Note is a part) by reference to the Trust
Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture. The
Notes and the Guarantees are subject to all such terms, and Holders are referred
to the Indenture and the Act for a statement of them. Capitalized terms not
defined herein have the meanings given to those terms in the Indenture. The
Notes include the Initial Notes and the

                                       A-2
<PAGE>

Exchange Notes issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement (as hereinafter defined).

                  The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and the applicable Authorizing
Resolution or supplemental indenture. Requests may be made to: D.R. Horton,
Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006, Attention: Chief
Financial Officer.

5. Optional Redemption.

                  Except as set forth below, the Notes are not redeemable prior
to April 15, 2007. Thereafter, the Notes will be redeemable in whole or in part,
from time to time at the option of the Company, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
twelve month period beginning with April 15 of the year indicated below, in each
case together with accrued and unpaid interest (including any Liquidated
Damages), if any, thereon to the date of redemption:

<Table>
<Caption>
                   Year                                             Percentage
                   ----                                             ----------
<S>                                                                 <C>
                   2007......................................          104.250%
                   2008......................................          102.833%
                   2009......................................          101.417%
                   2010 and thereafter.......................          100.000%
</Table>

                  In addition, the Company may redeem Notes, at any time and
from time to time, on or prior to April 15, 2005, with the net cash proceeds of
one or more Public Equity Offerings by the Company, at a redemption price equal
to 108.5% of the principal amount of such Notes, plus accrued and unpaid
interest (including any Liquidated Damages), if any, to the date of redemption;
provided, that at least 65% of the aggregate principal amount of Notes,
excluding any Notes held by the Company or any of its Affiliates, remains
outstanding immediately after the occurrence of such redemption. Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering.

                  Selection of the Notes or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Notes are to be redeemed at the
registered address of such Holder. Notes in denominations larger than $1,000 may
be redeemed in part. On and after the redemption date, interest ceases to accrue
on the Notes or portions thereof called for redemption, provided that if the
Company shall default in the payment of such Notes at the redemption price
together with accrued interest, interest shall continue to accrue at the rate
borne by the Notes.

                                      A-3
<PAGE>

6. Registration Rights Agreement.

                  The Holder of this Note is entitled to the benefits of a
Registration Rights Agreement, dated as of April 11, 2002, among the Company,
the Guarantors and the Initial Purchasers named therein (as such may be amended
from time to time, the "Registration Rights Agreement"). Capitalized terms used
in this subsection but not defined herein have the meanings assigned to them in
the Registration Rights Agreement.

                  If (i) within 90 days after the Issue Date, neither the
Exchange Offer Registration Statement nor the Shelf Registration Statement has
been filed with the Commission; (ii) within 150 days after the Issue Date, the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, has not been declared effective; (iii) within 180 days after the
Issue Date, the Exchange Offer has not been consummated; or (iv) after either
the Exchange Offer Registration Statement or the Shelf Registration Statement
has been declared effective, such Registration Statement thereafter ceases to be
effective or usable (subject, in the case of the Shelf Registration Statement,
to the exceptions set forth in the Registration Rights Agreement) in connection
with resales of Initial Notes or Exchange Notes in accordance with and during
the periods specified in Sections 2 and 3 of the Registration Rights Agreement
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), liquidated damages ("Liquidated Damages") will accrue on the Initial
Notes and the Exchange Notes from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. Liquidated Damages will accrue at a rate
equal to 0.25% per annum of the aggregate principal amount of the Notes during
the 90-day period immediately following the occurrence of any Registration
Default and shall increase by 0.25% per annum for each subsequent 90-day period
during which such Registration Default continues, but in no event shall such
Liquidated Damages exceed 1.00% per annum.

7. Denominations, Transfer, Exchange.

                  The Notes are in registered form only without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Notes by presentation of such Notes to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Note selected for
redemption, except the unredeemed part thereof if the Note is redeemed in part,
or transfer or exchange any Notes for a period of 15 days before a selection of
Notes to be redeemed.

8. Persons Deemed Owners.

                  The registered Holder of this Note shall be treated as the
owner of it for all purposes.

                                      A-4
<PAGE>

9. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.

10. Amendment, Supplement, Waiver.

                  Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Notes and any past default or
compliance with any provision relating to the Notes may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Notes. Without the consent of any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to create a Series and establish
its terms, to remove a Guarantor which, in accordance with the terms of the
Indenture, ceases to be liable in respect of its Guarantee, or to make any other
change, provided such action does not adversely affect the rights of any Holder.

11. Successor Corporation.

                  When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.

12. Trustee Dealings With Company.

                  American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.

13. No Recourse Against Others.

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.

14. Discharge of Indenture.

                  The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.

                                      A-5
<PAGE>

15. Authentication.

                  This Note shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Note.

16. Abbreviations.

                  Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

                                      A-6
<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign this Note, fill in the form
below:

                  I or we assign and transfer this Note to

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

--------------------------------------------------------------------------------
              (Insert assignee's social security or tax ID number)

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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint

--------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

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

Date:                            Your signature:
      ----------------                          --------------------------------
                                 (Sign exactly as your name appears on the other
                                 side of this Note)

                               SIGNATURE GUARANTEE

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

                  In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Note
(which effectiveness shall not have been suspended or terminated at the

                                      A-7
<PAGE>

date of the transfer) and (ii) two years from the Issue Date, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer:

                                   [Check One]

(1)  __           to the Company or a subsidiary thereof; or

(2)  __           pursuant to and in compliance with Rule 144A under the
                  Securities Act of 1933, as amended; or

(3)  __           to an institutional "accredited investor" (as defined in Rule
                  501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
                  as amended) that has furnished to the Trustee a signed letter
                  containing certain representations and agreements (the form of
                  which letter can be obtained from the Trustee); or

(4)  __           outside the United States to a "foreign person" in compliance
                  with Rule 904 of Regulation S under the Securities Act of
                  1933, as amended; or

(5)  __           pursuant to the exemption from registration provided by Rule
                  144 under the Securities Act of 1933, as amended; or

(6)  __           pursuant to an effective registration statement under the
                  Securities Act of 1933, as amended; or

(7)  __           pursuant to another available exemption from the registration
                  requirements of the Securities Act of 1933, as amended;

and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

                                      A-8
<PAGE>

                  [ ]      The transferee is an Affiliate of the Company.

                  Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (7)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.

                  If none of the foregoing items are checked, the Trustee or
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.14 of the Indenture
shall have been satisfied.

Dated:                                 Signed:
        --------------------                  ----------------------------------
                                              (Sign exactly as name appears on
                                              the other side of this Note)

Signature Guarantee:
                     -----------------------------------
                        (Signature must be guaranteed)

                               SIGNATURE GUARANTEE

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

                                      A-9
<PAGE>

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

                  The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:
        --------------          ------------------------------------------------
                                NOTICE:  To be executed by an executive officer

                                      A-10
<PAGE>

              [FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]

                                    GUARANTEE

                  [List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal and
interest, if any, on the Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article Nine of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.

                  No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. This waiver and release are part
of the consideration for the issuance of the Guarantees.

                  Each holder of a Note by accepting a Note agrees that any
Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.

                                      A-11
<PAGE>

                  The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

                                         [List of Guarantors]

                                         By:
                                            ------------------------------------
                                            Title:

                                      A-12
<PAGE>

                                                                       EXHIBIT B

NO.                                                           CUSIP NO.:
                                                                         -------

                           8.5% SENIOR NOTES DUE 2012

                                D.R. HORTON, INC.
                             A DELAWARE CORPORATION

promises to pay to

or registered assigns
the principal sum of                                Dollars on April 15, 2012

<Table>
<S>                                       <C>
8.5% Senior Notes Due 2012
Interest Payment Dates:  April 15         and  October 15, commencing October 15, 2002.
Record Dates:  April 1                    and  October 1.
</Table>

Authenticated:                                 Dated:

                                               D.R. HORTON, INC.

                                               [Seal]

                                               By
                                                  ------------------------------
                                                  Title:

                                               By
                                                  ------------------------------
                                                  Title:

American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the Notes
referred to in the within mentioned Indenture.

By:
   --------------------------------------
           Authorized Signatory

                                      B-1
<PAGE>

                                D.R. HORTON, INC.

                           8.5% SENIOR NOTES DUE 2012

1. Interest.

                  D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company will pay interest semiannually on April 15 and
October 15 of each year, commencing October 15, 2002, until the principal is
paid or made available for payment. Interest on the Notes will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from April 11, 2002, provided that, if there is no
existing default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 immediately preceding the interest payment date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.

3. Paying Agent and Registrar.

                  Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.

4. Indenture.

                  The Company issued the Notes under an Indenture dated as of
April 11, 2002, as supplemented ("Indenture"), among the Company, the Guarantors
and the Trustee. This Note is one of the duly authorized Exchange Notes of the
Company designated as its 8.5% Senior Notes due 2012 (the "Exchange Notes"). The
terms of the Notes and the Guarantees include those stated in the Indenture
(including those terms set forth in the Authorizing Resolution or supplemental
indenture pertaining to the Securities of the Series of which this Note is a
part) and those made part of the Indenture by reference to the Trust Indenture
Act of 1939 ("TIA") as in effect on the date of the Indenture. The Notes and the
Guarantees are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of them. Capitalized terms not defined
herein have the meanings given to those terms in the Indenture.

                                      B-2
<PAGE>

The Notes include the Initial Notes and the Exchange Notes issued in exchange
for the Initial Notes pursuant to the Registration Rights Agreement (as
hereinafter defined).

                  The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and the applicable Authorizing
Resolution or supplemental indenture. Requests may be made to: D.R. Horton,
Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006, Attention: Chief
Financial Officer.

5. Optional Redemption.

                  Except as set forth below, the Notes are not redeemable prior
to April 15, 2007. Thereafter, the Notes will be redeemable in whole or in part,
from time to time at the option of the Company, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
twelve month period beginning with April 15 of the year indicated below, in each
case together with accrued and unpaid interest (including any Liquidated
Damages), if any, thereon to the date of redemption:

<Table>
<Caption>
                   Year                                          Percentage
                   ----                                          ----------
<S>                                                              <C>
                   2007......................................       104.250%
                   2008......................................       102.833%
                   2009......................................       101.417%
                   2010 and thereafter.......................       100.000%
</Table>

                  In addition, the Company may redeem Notes, at any time and
from time to time, on or prior to April 15, 2005, with the net cash proceeds of
one or more Public Equity Offerings by the Company, at a redemption price equal
to 108.5% of the principal amount of such Notes, plus accrued and unpaid
interest (including any Liquidated Damages), if any, to the date of redemption;
provided, that at least 65% of the aggregate principal amount of Notes,
excluding any Notes held by the Company or any of its Affiliates, remains
outstanding immediately after the occurrence of such redemption. Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering.

                  Selection of the Notes or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Notes are to be redeemed at the
registered address of such Holder. Notes in denominations larger than $1,000 may
be redeemed in part. On and after the redemption date, interest ceases to accrue
on the Notes or portions thereof called for redemption, provided that if the
Company shall default in the payment of such Notes at the redemption price
together with accrued interest, interest shall continue to accrue at the rate
borne by the Notes.

                                      B-3
<PAGE>

6. Denominations, Transfer, Exchange.

                  The Notes are in registered form only without coupons in
denominations of $1,0001 and integral multiples of $1,000. A Holder may transfer
or exchange Notes by presentation of such Notes to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Note selected for
redemption, except the unredeemed part thereof if the Note is redeemed in part,
or transfer or exchange any Notes for a period of 15 days before a selection of
Notes to be redeemed.

7. Persons Deemed Owners.

                  The registered Holder of this Note shall be treated as the
owner of it for all purposes.

8. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.

9. Amendment, Supplement, Waiver.

                  Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Notes and any past default or
compliance with any provision relating to the Notes may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Notes. Without the consent of any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to create a Series and establish
its terms, to remove a Guarantor which, in accordance with the terms of the
Indenture, ceases to be liable in respect of its Guarantee, or to make any other
change, provided such action does not adversely affect the rights of any Holder.

----------
a        If applicable. Insert different or additional denominations and
         multiples.

                                      B-4
<PAGE>

10. Successor Corporation.

                  When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.

11. Trustee Dealings With Company.

                  American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.

12. No Recourse Against Others.

                  A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.

13. Discharge of Indenture.

                  The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.

14. Authentication.

                  This Note shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Note.

15. Abbreviations.

                  Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

                                      B-5
<PAGE>

                                 ASSIGNMENT FORM

                  If you the Holder want to assign this Note, fill in the form
below:

                  I or we assign and transfer this Note to

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

--------------------------------------------------------------------------------
              (Insert assignee's social security or tax ID number)

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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint

--------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

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

Date:                            Your signature:
      ----------------                          --------------------------------
                                 (Sign exactly as your name appears on the other
                                 side of this Note)

                               SIGNATURE GUARANTEE

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

                                      B-6
<PAGE>

              [FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]

                                    GUARANTEE

                  [List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal and
interest, if any, on the Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article Nine of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.

                  No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. This waiver and release are part
of the consideration for the issuance of the Guarantees.

                  Each holder of a Note by accepting a Note agrees that any
Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.

                                      B-7
<PAGE>

                  The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

                                           [List of Guarantors]

                                           By:
                                              ----------------------------------

                                      B-8

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