Document:

Exhibit 10.2

CARREKER CORPORATION

 

SENIOR EXECUTIVE

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into effective
as of April 19, 2006, between Carreker Corporation, a Delaware corporation
with its principal executive offices at 4055 Valley View Lane, Suite 1000,
Dallas, Texas 75244 (the “Company”), and Blake Williams (the “Executive”) who
resides at 4001 Centenary, Dallas, Texas 75225.

 

W I T N E S S E T H:

 

WHEREAS, the Executive and the Company desire to define the terms of
the employment of the Executive with the Company;

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and subject to the
terms and conditions hereinafter set forth, the parties hereto agree as
follows:

 

1.             DEFINITIONS.

 

In addition to the words and terms elsewhere defined in this Agreement,
the following words and terms as used herein shall have the following meanings,
unless the context or use indicates a different meaning:

 

“Cause” means (a) any act by the
Executive that is materially adverse to the best interests of the Company and
which, if the subject of a criminal proceeding, could result in a criminal
conviction for a felony or (b) the failure by the Executive to
substantially perform his/her duties hereunder, which duties are within the
control of the Executive (other than the failure resulting from the Executive’s
incapacity due to physical or mental illness), provided, however, that the
Executive shall not be deemed to be terminated for Cause under this subsection (b) unless
and until (1) after the Executive receives written notice from the Company
specifying with reasonable particularity the actions of Executive which
constitute a violation of this subsection (b) and (2) within a
period of 30 days after receipt of such notice (and during which the
violation is within the control of the Executive), Executive fails to
reasonably and prospectively cure such violation.

 

“Good Reason” means the occurrence of a
Triggering Event (as defined below) and (A) without his/her prior
concurrence, the Company materially diminishes the Executive’s duties, assigns to the Executive duties
inconsistent with his/her designated position, or reduces the Executive’s Base
Salary or Targeted Bonus to an amount less than previously determined or
established by the Chairman or Board of Directors, (B) the Company’s or
any subsidiary’s requiring the Executive to perform services at any location
outside the Dallas, Texas metropolitan area, other than reasonable business
travel consistent with Executive’s current travel requirements, or (C) any
change in any Executive benefit plans or arrangements in effect on the date
hereof in which the Executive participates (including without limitation any
pension and retirement plan, savings and profit sharing plan, stock ownership
or purchase plan, stock option plan, or life, medical or disability insurance
plan), which would adversely affect the Executive’s rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executive officers of the Company and does not result in a proportionately
greater reduction in the rights of or benefits to the Executive as compared to
any other executive officer of the Company.

 

“Triggering Date” means the date of a
Triggering Event.

 

“Triggering Event” means an event of a nature
that would be required to be reported by the Company in response to Item 6(d) of
Schedule 14A of Regulation 14A promulgated under the 

 

 

Exchange Act; provided that, without limitation, such an event shall be
deemed to have occurred if (a) any person or group (as such terms are used
in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then outstanding securities, or (b) there
are serving as directors a majority of persons who were elected as members of
the Board of Directors and were not nominated by management or the Board of
Directors of the Company to serve on the Board of Directors of the Company, or (c) the
Company is merged or consolidated with another corporation and as a result of
such merger or consolidation less than 51% of the outstanding voting securities
of the surviving or resulting corporation are owned in the aggregate by the
former shareholders of the Company, excluding for purposes of such calculation
shares of the voting securities of the Company owned by a party to such merger
or consolidation or affiliates (within the meaning of the Exchange Act) of such
party, as the same existed immediately prior to such merger or consolidation,
or (d) a liquidation or dissolution of the Company, or (e) a sale of
substantially all of the assets of the Company.

 

2.             EMPLOYMENT.

 

The Company hereby employs the Executive and the Executive hereby
accepts employment on the terms and conditions set forth herein.

 

3.             TERM.

 

The term of this Agreement shall commence on the date of execution
hereof and may be terminated only in accordance with the provisions of Section 9
of this Agreement.

 

4.             SALARY.

 

(a)           For all services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary as established each fiscal year by the Chairman or
Board of Directors (“Base Salary”), which Base Salary shall at no time be less
than the amount in effect at the date of this Agreement, payable in accordance
with the Company’s customary payroll practices.

 

(b)           The Executive shall be
entitled to participate in any employee bonus plan or arrangement made
available by the Chairman or Board of Directors in the future to its executive
officers, subject to and on a basis consistent with the terms, conditions and
overall administration of such plan or arrangement (“Targeted Bonus”).

 

(c)           The Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement (collectively referred to as “Benefits”) made available by the
Company in the future to its executive officers and key management personnel,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plan or arrangement. Nothing paid to the Executive under
any plan or arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the salary payable to the Executive pursuant
to Subsection 4(a) and 4(b).

 

5.             POSITION.

 

The Executive shall be engaged in an executive capacity as a senior
officer with the Company. The Employee will serve on the executive/management
committee of the Company that sets policy and strategy for, and directs and
manages the implementation and execution of, the business of, the Company and
its affiliates. The precise services of the Executive may be extended or
curtailed from time to time at the direction of the Chairman or the Board of
Directors of the Company.

 

6.             DUTIES.

 

During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal 

 

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business hours to the business and affairs of the Company and, to the
extent necessary to discharge the duties and responsibilities assigned to the
Executive hereunder. Such duties shall include those duties normally expected
of a President of Revenue Enhancement Division, including but not limited to
Revenue Enhancement Line of Business Management, including P & L
Management, Sales, Delivery, Product Management, Technology and product
development. Executive shall have commensurate authority for hiring all
Personnel or Contractors required to reasonably conduct the Business. Executive
further agrees to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such duties and responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate (with the approval of the Chairman and
Board of Directors), civic or charitable boards or committees, and (B) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement or create a conflict of interest.

 

7.             DISABILITY.

 

If the Executive is unable to perform his/her services by reason of
illness or incapacity for a continuous period in excess of six months, unless
otherwise required by the provisions of Sections 10 or 25 of this
Agreement, compensation otherwise payable by the Company shall cease and any
future payments to the Executive shall be subject to the terms and provisions
of long-term disability insurance coverage, if any, maintained by the Company.
Notwithstanding anything herein to the contrary, the Chairman or Board of
Directors of the Company may terminate the Executive’s employment with the
Company under this Agreement at any time after the Executive shall be absent
from his/her employment, for whatever reason, for a continuous period of more
than six months, and, except for any obligations of the Company under
Sections 10, 24, and 27 of this Agreement, all other obligations of the
Company hereunder shall cease upon such termination.

 

8.             COMPENSATION
AFTER DEATH.

 

If the Executive dies during the term of his/her employment, the
Company shall pay to such person as the Executive shall designate in a notice
filed with the Company, or, if no such person shall be designated, to his /her
estate as a lump sum death benefit, all earned and unpaid base salary, prorated
bonuses (if any) for that portion of the year of his/her death during which he
worked, other bonuses (if any) accrued and payable, and accrued benefits, all
as of the date of his/her death, in addition to any payments the Executive’s
spouse, beneficiaries, or estate may be entitled to receive pursuant to any
pension or employee benefit plan or life insurance policy which may be
maintained by the Company, and such payments shall fully discharge the Company’s
obligations hereunder.

 

9.             TERMINATION.

 

9.1           Termination
Prior to the Triggering Date.

 

(a)           Upon
60 days’ prior written notice to the Executive and prior to the Triggering
Date, the Company may terminate the Executive’s employment with the Company
under this Agreement with or without Cause.

 

(b)           Prior
to the Triggering Date, the Executive may terminate his /her employment with
the Company under this Agreement by giving 60 days’ prior written notice
of his/her desire to the Chairman or Board of Directors of the Company. The
Executive will continue to receive his/her Base Salary and Benefits through the
date of termination with no liability on the part of the Company for further
payments to the Executive unless Executive terminates his/her employment
pursuant to Section 9.1(c)(ii), at which time Sections 9.1(c) and (d) shall
apply.

 

(c)           In
the event that (i) the Company terminates the Executive’s employment for
any reason other than for Cause and at a time when Executive is not eligible to
receive benefits under the Company’s Long Term Disability Plan; or (ii) the
Executive terminates his/her employment as a 

 

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result of any of the following reasons: (A) without the Executive’s
consent the Company materially diminishes the scope of the Executive’s duties,
assigns to the Executive duties materially inconsistent with his/her designated
position, or reduces the Executive’s Base Salary or Targeted Bonus to an amount
less than previously determined or established by the Chairman or Board of
Directors, (B) the Company’s or any subsidiary’s requiring the Executive
to perform services at any location outside the Dallas, Texas metropolitan
area, other than reasonable business travel or (C) the Company breached
any of its material obligations under this Agreement and such breach is not
cured within 30 days after written notice thereof by the Executive; then
the Company shall pay the Executive severance payments in an amount equal to
the sum of the (x) Executive’s annualized Base Salary in effect at the
time of such termination (“Annual Base Salary”), and (y) an amount equal
to the maximum amount of Targeted Bonus payable to the Executive under the
bonus plan in effect for the fiscal year during which notice of such
termination occurs, not to exceed fifty percent (50%) of the Annual Base Salary
(“Bonus”) (provided, however, that if the basis for Executive’s termination is
the reduction in his/her Base Salary, the severance pay shall be based on the
Base Salary in effect prior to such reduction). The severance payments shall be
made in installments over a period of 12 months. Notwithstanding the
foregoing, if the Executive terminates his/her employment pursuant to
clause (ii) above, he shall be entitled to the severance payments
provided for in this paragraph only if he gives written notice to the Company
of his/her termination of employment within 30 days after the occurrence
of the event or events specified in clause (ii) on which he bases
his/her termination and such notice specifies such event or events.

 

(d)           The
severance payments provided for in this Section 9.1 shall be in lieu of
all severance payments or benefits to which the Executive might otherwise be
entitled under Company severance policies from time to time in effect, except
for (i) accrued and unpaid Base Salary to the date of termination, and (ii) any
bonus or other compensation due with respect to periods completed as of the
date of termination. Nothing contained in the foregoing shall be construed so
as to affect the Executive’s rights or the Company’s obligations relating to
agreements or benefits that are unrelated to termination of employment.

 

(e)           In
the event that the Company terminates the Executive’s employment for Cause, the
Company will have no liability on its part for further payments after the
termination date to the Executive.

 

(f)            In
voting upon such termination described in Subsections 9.1(a) or (b), if the
Executive is also a member of the Board of Directors of the Company, then he
may not vote on such termination, and the total number of members of the Board
of Directors will be reduced by one for purposes of voting on such termination.

 

9.2           Termination
After the Triggering Date.

 

(a)           On
or after the Triggering Date and irrespective of whether or not the Executive
has given notice of termination of employment pursuant to Section 9.2(c),
the Company may terminate the Executive’s employment with the Company under
this Agreement only for Cause and, subject to the provisions of Sections 25 and
28 hereof, with no liability on its part for further payments to the Executive.

 

(b)           On
or after the Triggering Date and irrespective of whether or not the Executive
has given notice of termination of employment pursuant to Section 9.2(c),
if the Executive’s employment with the Company is terminated without Cause or
if Executive terminates his/her employment with the Company for Good Reason,
the Executive will continue to accrue and receive his/her base salary and
Benefits through the date of termination and will be entitled to receive the
benefits provided for under Section 10 hereof.

 

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(c)           On
or after the Triggering Date, the Executive may, in his/her sole and absolute
discretion and without any prior approval by the Board of Directors of the
Company, and upon three months’ prior written notice to the Company, terminate
his/her employment with the Company under this Agreement for any reason
whatsoever. If the Executive’s employment with the Company under this Agreement
is terminated pursuant to this Subsection 9.2(c) and subject in all
respects to the provisions of Section 9.2(a) and (b), the Executive
will continue to accrue and receive his/her base salary and Benefits through
the date of termination. No termination of the Executive’s employment with the
Company pursuant to Subsections 9.2(b) or (c) shall in any way
terminate the Company’s obligations under Sections 25 and 28 of this Agreement.

 

10.           COMPENSATION
AFTER CERTAIN TERMINATIONS.

 

If the Executive’s employment with the Company is terminated by the
Company without Cause or by the Executive for Good Reason at any time on or
within two years after the Triggering Date, unless termination is a result of (a) 
the Executive having reached the age of 65, or (b) the Executive’s death,
then, within five days after the date of such termination, the Company shall
pay the Executive a lump sum amount in cash equal to two (2) times the sum
of the (x) Executive’s Annual Base Salary and (y) Bonus.

 

11.           TRANSFER
OF ASSETS TO IRREVOCABLE TRUST.

 

On the Triggering Date or as soon thereafter as the Company knows of
the occurrence of a Triggering Event, the Company shall transfer cash to an
irrevocable trust in an amount no less than the total amount which would be
payable to the Employee pursuant to Section 10 of this Agreement as if the
Employee’s employment terminated on the Triggering Date.

 

12.           MITIGATION.

 

The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Agreement
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the date of termination of Executive’s
employment with the Company, or otherwise.

 

13.           NON-COMPETE
AND CONFIDENTIAL INFORMATION.

 

13.1.        Covenant
Not to Compete.

 

(i)            Compliance
with the provisions of this Section 13 is an express condition of the
Executive’s right to receive payments, vesting, and benefits hereunder. The
Executive acknowledges and recognizes the confidential information and records
provided by the Company, the benefits provided hereunder, and the professional
training and experience he will receive from and the contacts he will be
provided by the Company, as well as the highly competitive nature of the
Company’s business, and in consideration of all of the above, agrees that
during the period beginning on the effective date of the Executive’s
termination of employment with the Company (the “Date of Termination”) and
ending twelve (12) months thereafter (the “Covered Time”), the Executive
will not compete with the business of the Company. For purposes hereof, “competition”
shall mean any engaging, directly or indirectly, in the “Covered Business” (as
hereinafter defined) in any state of the United States of America in which the
Company is conducting business as of the Date of Termination (the “Covered Area”).
For purposes of this Agreement, “Covered Business” shall mean providing any
services similar in scope or nature to the services provided by the Executive
immediately prior to his or her Date of Termination. For purposes of this Section 13,
the phrase “engaging, directly or indirectly” shall mean engaging directly or
having an interest, directly or indirectly, as owner, partner, shareholder,
agent, representative, employee, officer, director, independent contractor,
capital investor, lender, renderer of consultation services or advice or
otherwise (other than as the holder of less than 2% of the outstanding stock of
a 

 

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publicly-traded corporation), either alone or
in association with others, in the operation of any aspect of any type of
business or enterprise engaged in any aspect of the Covered Business.
Notwithstanding the foregoing, it will not be deemed to be a violation of this Section 13.1(i) for
Executive to accept employment by a client of the Covered Business upon
termination of his employment with the Company, so long as Executive is not
engaged directly or indirectly in providing consulting or other services to
outside, unaffiliated financial institutions or other third parties in a manner
similar to the services provided by the Covered Business.

 

(ii)           The
Executive agrees that during the term of this Agreement (including any
extensions thereof) and for the twenty-four (24) months thereafter, he
shall not (i) directly or indirectly solicit or attempt to solicit any of
the employees, agents, consultants, or representatives of the Company or
affiliates of the Company to leave any of such entities; or (ii) directly
or indirectly solicit or attempt to solicit any of the employees, agents,
consultants or representatives of the Company or affiliates of the Company to
become employees, agents, representatives or consultants of any other person or
entity.

 

(iii)          The
Executive understands that the provisions of Sections 13(a)(i) and (ii) may
limit his ability to earn a livelihood in a business similar to the business of
the Company but nevertheless agrees and hereby acknowledges that the
restrictions and limitations thereof are reasonable in scope, area, and
duration, are reasonably necessary to protect the goodwill and business
interests of the Company, and that the consideration provided under this
Agreement is sufficient to justify the restrictions contained in such
provisions. Accordingly, in consideration thereof and in light of the Executive’s
education, skills and abilities, the Executive agrees that he will not assert
that, and it should not be considered that, such provisions are either
unreasonable in scope, area, or duration, or will prevent him from earning a
living, or otherwise are void, voidable, or unenforceable or should be voided
or held unenforceable.

 

13.2.        Enforcement.

 

(i)            The
parties hereto agree and acknowledge that the covenants and agreements
contained herein are reasonable in scope, area, and duration and necessary to
protect the reasonable competitive business interests of the Company,
including, without limitation, the value of the proprietary information and
goodwill of the Company.

 

(ii)           The
Executive agrees that the covenants and undertakings contained in Section 13
of this Agreement relate to matters which are of a special, unique and
extraordinary character and that the Company cannot be reasonably or adequately
compensated in damages in an action at law in the event the Executive breaches
any of these covenants or undertakings. Therefore, the Executive agrees that
the Company shall be entitled, as a matter of course, without the need to prove
irreparable injury, to an injunction, restraining order or other equitable
relief from any court of competent jurisdiction, restraining any violation or
threatened violation of any of such terms by the Executive and such other
persons as the court shall order. The Executive agrees to pay costs and legal
fees incurred by the Company in obtaining such injunction.

 

(iii)          Rights
and remedies provided for in this Section 13(b) are cumulative and
shall be in addition to rights and remedies otherwise available to the parties
under any other agreement or applicable law.

 

(iv)          In
the event that any provision of this Agreement shall to any extent be held
invalid, unreasonable or unenforceable in any circumstances, the parties hereto
agree that the remainder of this Agreement and the application of such
provision of this Agreement to other circumstances shall be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement, or any part thereof, is held to be unenforceable because of the
scope or duration of or the area covered by such provision, the parties hereto
agree that the court or arbitrator making 

 

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such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such
unenforceable provisions) in order to make such provision enforceable to the fullest
extent permitted by law, and/or shall delete specific words and phrases, and
such modified provision shall then be enforceable and shall be enforced. The
parties hereto recognize that if, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants contained in this Agreement,
then that unenforceable covenant contained in this Agreement shall be deemed
eliminated from these provisions to the extent necessary to permit the
remaining separate covenants to be enforced. In the event that any court or
arbitrator determines that the time period or the area, or both, are
unreasonable and that any of the covenants is to that extent unenforceable, the
parties hereto agree that such covenants will second, in the greatest geographical
area that would not render them unenforceable.

 

(v)           In
the event of the Executive’s breach of this Section 13, in addition to all
other rights the Company may have hereunder or in law or in equity, all
payments and benefits hereunder shall cease; all options, stock, and other
securities granted by the Company, including stock obtained through prior
exercise of options, within the 12 month period prior to Executive’s
termination shall be immediately forfeited (whether or not vested), and the
original purchase price, if any, shall be returned to the Executive; and all
profits received through exercise of options or sale of stock, and all previous
payments and benefits made or provided hereunder within the 12 month
period prior to Executive’s termination shall be promptly returned and repaid
to the Company.

 

13.3.        Confidential
Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive’s employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 13(c) constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

 

14.           ENTIRE
AGREEMENT.

 

This Agreement embodies the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior negotiations, agreements, and understandings relating to such subject
matter, and may be modified or amended only by an instrument in writing signed
by the parties hereto.

 

15.           LAW
TO GOVERN.

 

This Agreement is executed and delivered in the State of Texas and
shall be governed, construed, and enforced in accordance with the laws of the
State of Texas.

 

16.           ASSIGNMENT.

 

This Agreement is personal to the parties, and neither this Agreement
nor any interest herein may be assigned (other than by will or by the laws of
descent and distribution) without the prior written consent of the parties
hereto nor be subject to alienation, anticipation, sale, pledge, encumbrance,
execution, levy, or other legal process of any kind against the Executive or
any of his/her beneficiaries or any other person. Notwithstanding the
foregoing, but subject to satisfaction of the Company’s obligation to fund the
Irrevocable Trust as provided in Section 11, the Company shall be
permitted to assign this Agreement to any corporation or other business entity
succeeding to substantially all of the 

 

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business and assets of the Company by merger, consolidation, sale of
assets, or otherwise, but only if by written agreement the Company’s successor
assumes in full all of the Company’s obligations under this Agreement. From and
after assignment of this Agreement by the Company in accordance with the
foregoing provisions, a Triggering Event shall be deemed to have occurred. Failure
by the Company to obtain such assumption prior to the effectiveness of such
succession shall be a breach of this Agreement and shall entitle the Executive
to immediately receive compensation under this Agreement from the Company and
from the Company’s successor in the same aggregate amount and on the same terms
as he would be entitled to hereunder if he had voluntarily terminated his/her
employment with the Company for Good Reason after the Triggering Date, and, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Triggering Date.

 

17.           BINDING
AGREEMENT.

 

Subject to the provisions of Section 16 of this Agreement, this
Agreement shall be binding upon and shall inure to the benefit of the Company
and the Executive and their respective representatives, successors, and
assigns.

 

18.           REFERENCES
AND GENDER.

 

All references to “Sections” and “Subsections” contained herein are,
unless specifically indicated otherwise, references to sections and subsections
of this Agreement. Whenever herein the singular number is used, the same shall
include the plural where appropriate, and words of any gender shall include
each other gender where appropriate.

 

19.           WAIVER.

 

No waiver of any right under this Agreement shall be deemed effective
unless the same is set forth in writing and signed by the party giving such
waiver, and no waiver of any right shall be deemed to be a waiver of any such
right in the future.

 

20.           DISPUTE
RESOLUTION.

 

20.1         Any
controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled solely and exclusively by arbitration in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association (“AAA”), as modified herein
(the “Rules”). Disputes will be heard and determined by a sole neutral
arbitrator who is a Texas licensed employment lawyer appointed in accordance
with the Rules. The place of arbitration shall be Dallas, Texas.

 

20.2         To
the extent permitted by law, judgment upon any award of the arbitrator shall be
final, binding and conclusive and may be entered upon the motion of either
party in any court having jurisdiction thereof or having jurisdiction over one
or more of the parties or their assets. The award of the arbitrators may grant
any relief that might be granted by a court of competent jurisdiction. Either
party, before or during any arbitration, may apply to a court of competent
jurisdiction for equitable relief where such relief is necessary to protect its
interests pending completion of the arbitration.

 

21.           NOTICES.

 

Except as may be otherwise specifically provided in this Agreement, all
notices required or permitted hereunder shall be in writing and will be deemed
to be delivered when deposited in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
parties at the respective addresses set forth herein, or at such other
addresses as may have theretofore been specified by written notice delivered in
accordance herewith.

 

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22.           SUPERSESSION.

 

This Agreement supersedes any other agreement or understanding, written
or oral, between the parties with respect to the matters covered hereunder, and
it contains the entire understanding of the parties and all of the covenants
and agreements between them with respect to Executive’s employment.

 

23.           HEADINGS.

 

The headings used in this Agreement are used for reference purposes
only and do not constitute substantive matter to be considered in construing
the terms of this Agreement.

 

24.           INVALID
PROVISION.

 

Any clause, sentence, provision, section, subsection, or paragraph of
this Agreement held by a court of competent jurisdiction to be invalid,
illegal, or ineffective shall not impair, invalidate, or nullify the remainder
of this Agreement, but the effect thereof shall be confined to the clause,
sentence, provision, section, subsection, or paragraph so held to be invalid,
illegal, or ineffective.

 

25.           RIGHTS
UNDER PLANS AND PROGRAMS.

 

Anything in this Agreement to the contrary notwithstanding, no
provision of this Agreement is intended, nor shall it be construed, to reduce
or in any way restrict any benefit to which the Executive may be entitled under
any agreement, plan, arrangement, or program providing benefits for the
Executive.

 

26.           MULTIPLE
COPIES.

 

This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall together constitute
one and the same instrument. The terms of this Agreement shall become binding
upon each party from and after the time that he or it executed a copy hereof.
In like manner, from and after the time that any party executes a consent or
other document, such consent or other document shall be binding upon such
parties.

 

27.           WITHHOLDING
OF TAXES.

 

The Company may withhold from any amounts payable under this Agreement
all federal, state, city, or other taxes as shall be required pursuant to any
law or government regulation or ruling.

 

28.           LEGAL
FEES AND EXPENSES.

 

The Company shall pay and be responsible for all legal fees and
expenses which the Executive may incur as a result of the Company’s failure to
perform under this Agreement or as a result of the Company or any successor
contesting the validity or enforceability of this Agreement. In the event of a
dispute Executive has the exclusive right to designate his counsel of choice.

 

29.           SET
OFF OR COUNTERCLAIM.

 

Except with respect to any claim against or debt or other obligation of
the Executive properly recorded on the books and records of the Company prior
to the Triggering Date, there shall be no right of set off or counterclaim
against, or delay in, any payment by the Company to the Executive or his /her
beneficiaries provided for in this Agreement in respect of any claim against or
debt or other obligation of the Executive, whether arising hereunder or
otherwise.

 

9

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.

 

	
   

  	
  CARREKER CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. D. Carreker 

  
	
   

  	
   

  	
  J. D. Carreker 

  
	
   

  	
   

  	
  Chairman of the Board and 

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Blake Williams 

  
	
   

  	
   

  	
  Blake Williams

  

 

10EXHIBIT
4.1

 

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

 

 

8.125%
Senior Notes due 2016

 

 

 

Eighth Supplemental
Indenture

 

Dated
as of June 6, 2006

 

 

 

 

U.S.
BANK NATIONAL ASSOCIATION,

Trustee

 

 

 

TABLE
OF CONTENTS

	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE ONE

  
	
   

  
	
  THE 8.125% SENIOR NOTES DUE 2016

  
	
   

  
	
  Section
  1.01.

  	
  Designation
  of 8.125% Senior Notes Due 2016.

  	
  2

  
	
  Section
  1.02.

  	
  Interest.

  	
  2

  
	
  Section
  1.03.

  	
  Redemption.

  	
  2

  
	
  Section
  1.04.

  	
  Maturity.

  	
  2

  
	
  Section
  1.05.

  	
  Other
  Terms of the Notes.

  	
  2

  
	
   

  
	
  ARTICLE TWO

  
	
   

  
	
  CERTAIN DEFINITIONS

  
	
   

  
	
  ARTICLE THREE

  
	
   

  
	
  COVENANTS

  
	
   

  
	
  Section
  3.01.

  	
  Disposition
  of Proceeds of Asset Sales.

  	
  21

  
	
  Section
  3.02.

  	
  Limitations
  on Restricted Payments.

  	
  25

  
	
  Section
  3.03.

  	
  Limitations
  on Additional Indebtedness.

  	
  26

  
	
  Section
  3.04.

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

  	
  28

  
	
  Section
  3.05.

  	
  Change of
  Control.

  	
  28

  
	
  Section
  3.06.

  	
  Limitations
  on Transactions with Stockholders and Affiliates.

  	
  30

  
	
  Section
  3.07.

  	
  Limitations
  on Liens.

  	
  31

  
	
  Section
  3.08.

  	
  Limitations
  on Restrictions on Distributions from Restricted Subsidiaries.

  	
  31

  
	
  Section
  3.09.

  	
  Maintenance
  of Consolidated Tangible Net Worth.

  	
  32

  
	
  Section
  3.10.

  	
  Limitations
  on Mergers and Consolidations.

  	
  34

  
	
  Section 3.11.

  	
  Reports.

  	
  36

  
	
  Section
  3.12.

  	
  Subsidiary
  Guarantees.

  	
  36

  
	
  Section
  3.13.

  	
  Limitation
  of Applicability of Certain Covenantsif the Notes Are Rated Investment Grade.

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR

  
	
   

  
	
  SUBSIDIARY GUARANTEES

  
	
   

  
	
  Section
  4.01.

  	
  Subsidiary
  Guarantees of Notes.

  	
  37

  
				

 

i

 

	
  Section
  4.02.

  	
  Execution
  and Delivery of Subsidiary Guarantee.

  	
  39

  
	
  Section
  4.03.

  	
  Additional
  Subsidiary Guarantors.

  	
  39

  
	
  Section
  4.04.

  	
  Release
  of a Subsidiary Guarantor.

  	
  39

  
	
  Section
  4.05.

  	
  Waiver
  of Subrogation.

  	
  41

  
	
   

  
	
  ARTICLE FIVE

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section
  5.01.

  	
  Events
  of Default.

  	
  41

  
	
  Section
  5.02.

  	
  Amendment,
  Supplement and Waiver.

  	
  44

  
	
  Section
  5.03.

  	
  Indenture.

  	
  45

  
	
  Section
  5.04.

  	
  Governing
  Law.

  	
  45

  
	
  Section
  5.05.

  	
  No
  Adverse Interpretation of Other Agreements.

  	
  45

  
	
  Section
  5.06.

  	
  Successors
  and Assigns.

  	
  45

  
	
  Section
  5.07.

  	
  Duplicate
  Originals.

  	
  45

  
	
  Section
  5.08.

  	
  Severability.

  	
  45

  

 

 

 

	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Form of Note

  
	
  Exhibit B

  	
  —

  	
  Form of Exchange Note

  
	
  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

  

 

 

ii

 

EIGHTH SUPPLEMENTAL INDENTURE dated as of June 6, 2006 (the ”Supplemental
Indenture”), to the Indenture dated as of April 17, 2002 (as amended,
modified or supplemented from time to time in accordance therewith, the “Indenture”),
by and among BEAZER HOMES USA, INC., a Delaware corporation (the “Company”),
each of the Subsidiary Guarantors (as defined herein) and U.S. BANK NATIONAL
ASSOCIATION, as trustee (the “Trustee”).

 

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

 

WHEREAS, the Company, the Subsidiary 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 Subsidiary Guarantors desire and have
requested the Trustee to join them in the execution and delivery of this
Supplemental Indenture in order to establish and provide for the issuance by
the Company of a series of Securities designated as its 8.125% Senior Notes due
2016, in the initial aggregate principal amount of $275,000,000.  The 8.125% Senior Notes due 2016 shall be
substantially in the form attached hereto as Exhibit A (the “Initial
Notes”) and the 8.125% Senior Notes due 2016 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 Subsidiary 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 Subsidiary
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 Subsidiary Guarantors and the Trustee, in
accordance with its terms, and a valid amendment of, and supplement to, the
Indenture have been done;

 

NOW,
THEREFORE:

 

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

 

 

 

ARTICLE ONE

The 8.125% Senior Notes due 2016

 

Section
1.01.                                                Designation of 8.125%
Senior Notes due 2016.

 

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 “8.125% Senior Notes due 2016.”  The Notes shall be in the form of Exhibit
A and Exhibit B hereto.  The
Notes shall be guaranteed by the Subsidiary Guarantors as provided herein.  The Notes may bear an appropriate legend
regarding original issue discount for federal income tax purposes.  Subject to the terms herein, including
compliance with Section 3.03 hereof, the Company may, at its option,
without consent from the Holders, issue additional Notes from time to time.

 

Section
1.02.                                                Interest.

 

The Notes shall bear interest at the rate set forth in the Notes.  Interest on the Notes shall be payable to the
persons in whose name the Notes are registered at the close of business on the
record date for such interest payment. 
The date from which interest shall accrue for each Note shall be the
most recent to occur of June 6, 2006 or the most recent Interest Payment Date.

 

Section
1.03.                                                Redemption.

 

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

 

Section
1.04.                                                Maturity.

 

The date on which the principal of the Notes is payable, unless
accelerated pursuant to the terms hereof, shall be June 15, 2016.

 

Section
1.05.                                                Other Terms of
the Notes.

 

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

 

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

 

 

2

 

ARTICLE TWO

Certain Definitions

 

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

 

“Acquisition Indebtedness” means
Indebtedness of any Person and its Subsidiaries existing at the time such
Person became a Subsidiary of the Company (or such Person is merged with or
into the Company or one of the Company’s Subsidiaries) or assumed in connection
with the acquisition of assets from any such Person, including, without
limitation, Indebtedness Incurred in connection with, or in contemplation of
(a) such Person being merged with or into or becoming a Subsidiary of the
Company or one of its Subsidiaries (but excluding Indebtedness of such Person
which is extinguished, retired or repaid in connection with such Person being
merged with or into or becoming a Subsidiary of the Company or one of its
Subsidiaries) or (b) such acquisition of assets from any such Person.

 

“Affiliate” of any Person means any other Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such Person.  For purposes
hereof, each executive officer and director of the Company and each Subsidiary
of the Company will be an Affiliate of the Company.  In addition, for purposes hereof, control of
a Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.  Notwithstanding
the foregoing, the term “Affiliate” will not include, with respect to the
Company or any Restricted Subsidiary which is a Wholly Owned Subsidiary of the
Company, any Restricted Subsidiary which is a Wholly Owned Subsidiary of the
Company.

 

“Applicable Debt” means all Indebtedness of the Company or any
of its Restricted Subsidiaries (i) under the Bank Credit Facility or (ii) that
is publicly traded (including in the Rule 144A market), including without
limitation the Company’s senior notes and senior subordinated notes outstanding
on the Issue Date. Applicable Debt secured by a Lien on a Restricted Subsidiary’s
property or issued by such Restricted Subsidiary shall be deemed guaranteed by
such Restricted Subsidiary.

 

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

 

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Business Day” means any day other than a Legal Holiday.

 

“Capital Stock” of any Person means any and all shares, rights
to purchase, warrants or options (whether or not currently exercisable),
participations or other equivalents of or interests in (however designated and
whether voting or non-voting) the equity (which includes, but is not limited
to, common stock, preferred stock and partnership and joint venture interests)
of such Person (excluding any debt securities that are convertible into, or
exchangeable for, such equity).

 

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

 

 

4

 

“Change
of Control” means any of the following:

 

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

 

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

 

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

 

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

 

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

 

“Commission” means the U.S. Securities and Exchange Commission.

 

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

 

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

 

(i)      Consolidated Net Income, plus

 

 

5

 

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

 

(iii)    Consolidated Interest
Expense, plus

 

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

 

(v)     all other non-cash items
reducing Consolidated Net Income during such period,

 

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

 

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

 

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

 

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

 

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

 

(iv)    with respect to any other
transaction pursuant to which any Person becomes a Subsidiary of the Company or
is merged with or into the Company or one of the Company’s Subsidiaries or
pursuant to which any Person’s assets are acquired, such Consolidated Fixed
Charge Coverage Ratio shall be calculated on a pro forma basis as if such
transaction had occurred on the first day of such four full fiscal quarter
period, but 

 

 

6

 

only
if such transaction would require a pro forma presentation in financial
statements prepared pursuant to Rule 11-02 of Regulation S-X under
the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

(ii)     except to the extent
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 or (b) the assets of such Person are acquired by the Company
or any of its Restricted Subsidiaries,

 

(iii)    the net income of any
Restricted Subsidiary to the extent that (but only so long as) the declaration
or payment of dividends or similar distributions by such Restricted Subsidiary
of that income is not permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary during such period,

 

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

 

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

 

 

7

 

(c) other
extraordinary items realized by the Company or any of its Restricted Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Disqualified Stock” means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening 

 

 

8

 

of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the final
maturity date of the Notes; provided that any Capital Stock which would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require the Company to repurchase or redeem such Capital
Stock upon the occurrence of a change of control occurring prior to the final
maturity of the Notes will not constitute Disqualified Stock if the change of
control provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than those contained in Section 3.05
hereof and such Capital Stock specifically provides that the Company will not
repurchase or redeem (or be required to repurchase or redeem) any such Capital
Stock pursuant to such provisions prior to the Company’s repurchase of Notes
pursuant to Section 3.05 hereof.

 

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

 

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

 

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

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Exchange Notes” has the meaning provided in the Recitals.

 

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

 

“Extinguished Covenants” has the meaning set forth in
Section 3.13 hereof.

 

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

 

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

 

“Hedging Obligations” of any Person means the obligations of
such Person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate 

 

 

9

 

collar agreement, option or futures contract or
other similar agreement or arrangement relating to interest rates or foreign
exchange rates.

 

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

 

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

 

“Indebtedness”
of any Person at any date means, without duplication,

 

(i)      all indebtedness of such
Person for borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof),

 

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

 

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

 

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

 

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

 

(vi)    all Capitalized Lease
Obligations of such Person,

 

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

 

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

 

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

“Initial Notes” has the meaning provided in the Recitals.

 

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

 

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

 

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

 

 

11

 

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

 

“Investment Grade” means, with respect to a debt rating of the
Notes, a rating of Baa3 or higher by Moody’s together with a rating of BBB- or
higher by S&P or, in the event S&P or Moody’s or both shall cease
rating the Notes (for reasons outside the control of the Company) and the
Company shall select any other Rating Agency, the equivalent of such ratings by
such other Rating Agency.

 

“Investments” of any Person means all (i) investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) guarantees of Indebtedness or other obligations of any
other Person by such Person, (iii) purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other
securities of any other Person and (iv) other items that would be classified as
investments on a balance sheet of such Person determined in accordance with
GAAP.

 

“Issue Date” means the initial date of issuance of the Notes
hereunder.

 

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

 

“Lien” means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or other similar encumbrance of any kind upon
or in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including, without limitation, any conditional
sale or other title retention agreement, and any lease in the nature thereof,
any option or other agreement to sell, and any filing of, or agreement to give,
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).

 

 

12

 

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

 

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

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor
to its debt rating business.

 

“Net Proceeds” means

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

13

 

“Non-Recourse Indebtedness” with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for
collection of principal and interest on such Indebtedness is against the
specific property identified in the instruments evidencing or securing such
Indebtedness and such property was acquired with the proceeds of such
Indebtedness or such Indebtedness was Incurred within 90 days after the acquisition
of such property and (ii) no other assets of such Person may be realized upon
in collection of principal or interest on such Indebtedness.

 

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

 

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

 

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

 

“Permitted Investments” of any Person means Investments of such
Person in (i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within 180 days of the date of acquisition thereof, (ii) certificates
of deposit maturing within 180 days of the date of acquisition thereof issued
by a bank, trust company or savings and loan association which is organized
under the laws of the United States or any state thereof having capital,
surplus and undivided profits aggregating in excess of $250 million and a Keefe
Bank Watch Rating of C or better, (iii) certificates of deposit maturing within
180 days of the date of acquisition thereof issued by a bank, trust company or
savings and loan association organized under the laws of the United States or
any state thereof other than banks, trust companies or savings and loan
associations satisfying the criteria in (ii) above, provided that the
aggregate amount of all certificates of deposit issued to the Company at any
one time by such bank, trust company or savings and loan association will not
exceed $100,000, (iv) commercial paper given the highest rating by two established
national credit rating agencies and maturing not more than 180 days from the
date of the acquisition thereof, (v) repurchase agreements or money-market accounts
which are fully secured by direct obligations of the United States or any
agency thereof and (vi) in the case of the Company and its Subsidiaries, any
receivables or loans taken by the Company or a Subsidiary in connection with
the sale of any asset otherwise permitted hereunder.

 

“Permitted
Liens” means

 

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

 

 

14

 

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

 

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

 

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

 

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

 

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

 

(vii)   zoning restrictions,
licenses, restrictions on the use of real property or minor irregularities in
title thereto which do not materially impair the use of such real property in
the ordinary course of business of the Company and its Subsidiaries or the
value of such real property for the purpose of such business,

 

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

 

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

 

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

 

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

 

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

 

 

15

 

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

 

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

 

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

 

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

 

(xvii) Liens securing Indebtedness
of an Unrestricted Subsidiary,

 

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

 

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

 

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

 

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

 

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

 

(xxiii) Liens on property acquired
by the Company or a Restricted Subsidiary and Liens on property of a Person
existing at the time such Person is merged with or into or consolidated with
the Company or any Restricted Subsidiary or becomes a Restricted Subsidiary; provided
that in each case such Liens (A) were in existence prior to the
contemplation of such acquisition, merger or consolidation and (B) do not
extend to any asset other than those of the Person merged with or into or
consolidated with the Company or the Restricted Subsidiary or the property
acquired by the Company or the Restricted Subsidiary, and

 

 

16

 

(xxiv) Liens replacing any of the Liens described in
clauses (xiii) and (xxiii) above; provided that (A) the
principal amount of the Indebtedness secured by such Liens shall not be increased
(except to the extent of reasonable premiums or other payments required to be
paid in connection with the repayment of the previously secured Indebtedness or
Incurrence of related Refinancing Indebtedness and expenses Incurred in
connection therewith), (B) the principal amount of new Indebtedness
secured by such Liens, determined as of the date of Incurrence, has a Weighted
Average Life of Maturity at least equal to the remaining Weighted Average Life
to Maturity of the previously secured Indebtedness, (C) the maturity of
the new Indebtedness secured by such Liens is not earlier than that of the
previously secured Indebtedness Incurred or repaid, and (D) the new Liens
shall be limited to the property or part thereof which secured the Lien so
replaced or property substituted therefor as a result of the destruction,
condemnation or damage of such property.

 

“Person” means any individual, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.

 

“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.

 

“Rating Agency” means a statistical rating agency or agencies,
as the case may be, nationally recognized in the United States and selected by
the Company (as certified by a resolution of the Board of Directors of the
Company) which shall be substituted for S&P or Moody’s, or both, as the
case may be.

 

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

 

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

 

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

 

(iii)    the portion, if any, of
the Refinancing Indebtedness that is scheduled to mature on or prior to the
maturity date of the Notes has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Weighted Average Life to Maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes,

 

(iv)    such Refinancing
Indebtedness is in an aggregate amount that is equal to or less than the
aggregate amount then outstanding (including accrued interest) under the 

 

 

17

 

Indebtedness
being refunded, refinanced or extended plus an amount necessary to pay any
reasonable fees and expenses, including premiums and defeasance costs, related
to such refinancing,

 

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

 

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

 

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

 

“Registration Rights Agreement” means that certain registration
rights agreement by and among the Company, the Subsidiary Guarantors and the
Initial Purchasers dated as of June 6, 2006.

 

“Restricted Investment” with respect to any Person means any
Investment (other than any Permitted Investment) by such Person in any (i) of
its Affiliates, (ii) executive officer or director or any Affiliate of such
Person, or (iii) any other Person other than a Restricted Subsidiary.  Notwithstanding the above, a Subsidiary
Guarantee shall not be deemed a Restricted Investment.

 

“Restricted
Payment” with respect to any Person means

 

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

 

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

 

(iii)    any Restricted
Investment, and

 

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

 

provided, however, that with respect to the Company
and its Subsidiaries, Restricted Payments will not include (a) any payment
described in clause (i), (ii) or (iii) above made to the Company 

 

 

18

 

or any of its Restricted Subsidiaries which are Wholly Owned
Subsidiaries by any of the Company’s Subsidiaries, or (b) any purchase, redemption,
retirement or other acquisition for value of Indebtedness or Capital Stock of
such Person or its Subsidiaries if the consideration therefor consists solely
of Capital Stock (other than Disqualified Stock) of such Person.

 

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

 

“S&P” means Standard and Poor’s Ratings Service, a division
of McGraw Hill, Inc., a New York corporation, or any successor to its debt
rating business.

 

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

 

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

 

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

 

“Subsidiary Guarantors” means each of (i) Beazer Homes Corp., a
Tennessee corporation, Beazer/Squires Realty, Inc., a North Carolina
corporation, Beazer Homes Sales Inc., a Delaware corporation, Beazer Realty
Corp., a Georgia corporation, Beazer Homes Holdings Corp., a Delaware
corporation, Beazer Homes Texas Holdings, Inc., a Delaware corporation, Beazer
Homes Texas, L.P., a Delaware limited partnership, April Corporation, a
Colorado corporation, Beazer SPE, LLC, a Georgia limited liability company,
Beazer Homes Investments, LLC, a Delaware limited liability company, Beazer
Realty, Inc., a New Jersey corporation, Homebuilders Title Services of
Virginia, Inc., a Virginia corporation, Homebuilders Title Services, Inc., a
Delaware corporation, Texas Lone Star Title, L.P., a Texas limited partnership,
Beazer Allied Companies Holdings, Inc., a Delaware corporation, Paragon Title,
LLC, an Indiana limited liability company, Trinity Homes LLC, an Indiana
limited liability company, Beazer Homes Indiana, LLP, an Indiana limited
liability partnership, Beazer Homes Indiana Holdings Corp., a Delaware
corporation, Beazer Realty Services, LLC, a Delaware limited liability company,
Beazer Realty Los Angeles, Inc., a Delaware corporation, Beazer Realty
Sacramento, Inc., a Delaware corporation, BH Building Products, LP, a Delaware
limited partnership, BH Procurement Services, LLC, a Delaware limited
partnership, Beazer General Services, Inc., a Delaware corporation, Beazer
Commercial Holdings, LLC, a Delaware limited liability company, Beazer
Clarksburg, LLC, a Missouri limited liability company and Arden Park Ventures,
LLC, a Florida limited liability company and
(ii) each of the Company’s Subsidiaries that becomes a guarantor of the Notes
pursuant to the provisions of this Supplemental Indenture.

 

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

 

 

19

 

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

 

“Unrestricted Subsidiary” means United Home Insurance Corporation,
a Vermont corporation, Security Title Insurance Company, Inc., a Vermont
corporation, and Beazer Mortgage Corporation, a Delaware corporation, and each
of the Subsidiaries of the Company (including any newly formed or acquired
Subsidiary) so designated by a resolution adopted by the Board of Directors of
the Company as provided below and provided that (a) neither the Company
nor any of its other Subsidiaries (other than Unrestricted Subsidiaries) (1) provides
any direct or indirect credit support for any Indebtedness of such Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of
such Subsidiary, (b) the creditors with respect to Indebtedness for borrowed
money of such Subsidiary have agreed in writing that they have no recourse,
direct or indirect, to the Company or any other Subsidiary of the Company
(other than Unrestricted Subsidiaries), including, without limitation, recourse
with respect to the payment of principal or interest on any Indebtedness of
such Subsidiary and (c) no default with respect to any Indebtedness of such Subsidiary
(including any right which the holders thereof may have to take enforcement action
against such Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company and of its other Subsidiaries
(other than other Unrestricted Subsidiaries), to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.  The Board
of Directors of the Company may designate an Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) any such redesignation will be
deemed to be an Incurrence by the Company and its Restricted Subsidiaries of
the Indebtedness (if any) of such redesignated Subsidiary in accordance with Section
3.03 hereof as of the date of such redesignation, (ii) immediately after giving
effect to such redesignation and the Incurrence of any such additional
Indebtedness, the Company and its Restricted Subsidiaries could incur $1.00 of
additional Indebtedness under the Consolidated Fixed Charge Coverage Ratio
contained in Section 3.03 hereof and (iii) the Liens of such Unrestricted
Subsidiary could then be incurred in accordance with Section 3.07 hereof
as of the date of such redesignation. 
Subject to the foregoing, the Board of Directors of the Company also may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided
that (i) all previous Investments by the Company and its Restricted
Subsidiaries in such Restricted Subsidiary (net of any returns previously paid
on such Investments) will be deemed to be Restricted Payments at the time of
such designation and will reduce the amount available for Restricted Payments
under Section 3.02 hereof, (ii) immediately after giving effect to such designation
and reduction of amounts available for Restricted Payments under Section 3.02
hereof, the Company and its Restricted Subsidiaries could incur $1.00 of additional
Indebtedness under the Consolidated Fixed Charge Coverage Ratio contained in
Section 3.03 hereof and (iii) no Default or Event of Default shall have
occurred or be continuing.  Any such
designation or redesignation by the Board of Directors of the Company will be
evidenced to the Trustee by the filing with the Trustee of a certified copy of
the resolution of the Board of Directors of the Company giving effect to such
designation or redesignation and an Officers’ Certificate certifying that such
designation or redesignation complied with the foregoing conditions and setting
forth the underlying calculations.

 

“Weighted Average Life to Maturity” means, when applied to any
Indebtedness or portion thereof, at any date, the number of years obtained by
dividing (i) the sum of the products 

 

 

20

 

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 (a) above.

 

“Wholly Owned Subsidiary” of any Person means (i) a Subsidiary,
of which 100% of the Common Equity (except for directors’ qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by such
Person or through one or more other Wholly Owned Subsidiaries of such Person,
or (ii) any entity other than a corporation in which such Person, directly or
indirectly, owns all of the Common Equity of such entity.

 

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

 

ARTICLE THREE

Covenants

Section 3.01.                                                Disposition of
Proceeds of Asset Sales.

 

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

 

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

 

 

21

 

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

 

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

 

The amount of such Net Proceeds neither used to repay the Indebtedness
described above nor used or invested as set forth in the preceding sentence
constitutes “Excess Proceeds.” 
Notwithstanding the above, any Asset Sale that is subject to
Section 3.10 hereof shall not be subject to this Section 3.01.

 

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

 

(c)           When
the aggregate amount of Excess Proceeds equals $10,000,000 or more, the Company
shall so notify the Trustee in writing by delivery of an Officers’ Certificate
and will offer to purchase from all Holders (an “Excess Proceeds Offer”),
and shall purchase from Holders accepting such Excess Proceeds Offer on the
date fixed for the closing of such Excess Proceeds Offer (the “Asset Sale
Offer Date”), the maximum principal amount (expressed as a multiple of
$1,000) of Notes plus accrued and unpaid interest thereon, if any, to the Asset
Sale Offer Date that may be purchased and paid, as the case may be, out of the
Excess Proceeds, at an offer price (the “Asset Sale Offer Price”) in
cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the Asset Sale Offer Date, in accordance with
the procedures set forth in this Section 3.01. 
To the extent that the aggregate amount of Notes tendered pursuant to an
Excess Proceeds Offer is less than the Excess Proceeds relating thereto, then
the Company may use such Excess Proceeds, or a portion thereof, for general
corporate purposes in the business of the Company and its Restricted Subsidiaries
existing on the 

 

 

22

 

date hereof.  Upon completion of
an Excess Proceeds Offer, the amount of Excess Proceeds shall be reset at zero.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)           information concerning the details of
the Excess Proceeds Offer and the business of the Company which the Company in
good faith believes will enable such Holders to make an informed decision
(which at a minimum will include (A) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial statements of the Company),
the most recent subsequently filed Quarterly Report on Form 10-Q and any
Current Report on Form 8-K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Sales otherwise 

 

 

23

 

described in the offering
materials relating to the Excess Proceeds Offer (or corresponding successor reports)
(or in the event the Company is not required to prepare any of the foregoing
Forms, the comparable information required pursuant to Section 3.11
hereof); provided that the Company may at its option incorporate by
reference any such filed reports in the notice, (B) a description of material
developments in the Company’s business subsequent to the date of the latest of
such reports and (C) if material, appropriate pro forma financial information).

 

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

 

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

 

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

 

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

 

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

 

 

24

 

Section
3.02.                                                Limitations on
Restricted Payments.

 

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

 

(i)            the amount of such proposed Restricted
Payment (the amount of such Restricted Payment, if other than in cash, will be
determined in good faith by a majority of the disinterested members of the
Board of Directors of the Company), when added to the aggregate amount of all
Restricted Payments, or payments that would have been Restricted Payments if the
Supplemental Indenture had been in effect at the time of such payments,
declared or made after April 17, 2002, exceeds the sum of:

 

(1)           $100 million, plus

 

(2)           50% of the Company’s Consolidated Net
Income accrued during the period (taken as a single period) commencing April 1,
2002 and ending on the last day of the fiscal quarter immediately preceding the
fiscal quarter in which the Restricted Payment is to occur (or, if such
aggregate Consolidated Net Income is a deficit, minus 100% of such aggregate
deficit), plus

 

(3)           the Net Proceeds derived from the
issuance and sale of Capital Stock of the Company and its Restricted
Subsidiaries that is not Disqualified Stock (other than a sale to a Subsidiary
of the Company) after April 17, 2002, plus

 

(4)           100% of the principal amount of, or,
if issued at a discount, the accreted value of, any Indebtedness of the Company
or a Restricted Subsidiary which is issued (other than to a Subsidiary of the
Company) after April 17, 2002 that is converted into or exchanged for Capital
Stock of the Company that is not Disqualified Stock, plus

 

(5)           100% of the aggregate amounts
received by the Company or any Restricted Subsidiary from the sale, disposition
or liquidation (including by way of dividends) of any Investment (other than to
any Subsidiary of the Company and other than to the extent sold, disposed of or
liquidated with recourse to the Company or any of its Subsidiaries or to any of
their respective properties or assets) but only to the extent (x) not included
in clause (2) above and (y) that the making of such Investment constituted a
permitted Restricted Investment (assuming for such purpose that the Supplemental
Indenture had been in effect since April 17, 2002), plus

 

(6)           100% of the principal amount of, or
if issued at a discount, the accreted value of, any Indebtedness or other
obligation that is the subject of a guarantee by the Company which is released
(other than due to a payment on such guarantee) after April 17, 2002, but only
to the extent that such guarantee constituted a permitted Restricted Payment (assuming
for such purpose that the Supplemental Indenture had been in effect since
April 17, 2002); or

 

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)           any purchase, redemption, retirement
or other acquisition for value of 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 $500,000 in any calendar year and $5 million in the aggregate since April
17, 2002.

 

Section
3.03.                                                Limitations on
Additional Indebtedness.

 

(a)           The
Company shall not, and shall not cause or permit any of its Restricted Subsidiaries,
directly or indirectly, to, Incur any Indebtedness including Acquisition
Indebtedness; provided that the Company and the Subsidiary Guarantors
may Incur Indebtedness, including Acquisition Indebtedness, if, after giving
effect thereto and the application of the proceeds therefrom, either
(i) the Company’s Consolidated Fixed Charge  Coverage Ratio on the date thereof would be
at least 2.0 to 1.0 or (ii) the ratio of Indebtedness of the Company and
the Restricted Subsidiaries to Consolidated Tangible Net Worth is less than
2.25 to 1.

 

 

26

 

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

 

(i)            the Company or any Subsidiary
Guarantor from Incurring (A) Refinancing Indebtedness or
(B) Non-Recourse Indebtedness,

 

(ii)           the Company from Incurring
Indebtedness evidenced by the Notes issued on the Issue Date or the Exchange
Notes,

 

(iii)          the Company or any Subsidiary
Guarantor from Incurring Indebtedness under Working Capital Facilities not to
exceed the greater of $250 million or 15% of Consolidated Tangible Assets,

 

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

 

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

 

(vi)          any Subsidiary Guarantor from
guaranteeing Indebtedness of the Company or any other Subsidiary Guarantor, or
the Company from guaranteeing Indebtedness of any Subsidiary Guarantor, in each
case permitted to be Incurred under the Indenture (other than Non-Recourse
Indebtedness),

 

(vii)         (a) any Restricted Subsidiary from
Incurring Indebtedness owing to the Company or any Subsidiary Guarantor that is
both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided
that (I) such Indebtedness is subordinated to any Subsidiary Guarantee of
such Restricted Subsidiary, if any, and (II) such Indebtedness shall only
be permitted pursuant to this clause (vii)(a) for so long as the Person to
whom such Indebtedness is owing is the Company or a Subsidiary Guarantor that
is both a Wholly Owned Subsidiary and a Restricted Subsidiary, and (b) the
Company from Incurring Indebtedness owing to any Subsidiary Guarantor that is
both a Wholly Owned Subsidiary and a Restricted Subsidiary; provided
that (I) such Indebtedness is subordinated to the Company’s obligations
under the Notes and the provisions hereof, and (II) such Indebtedness
shall only be permitted pursuant to this clause (vii)(b) for so long as
the Person to whom such Indebtedness is owing is a Subsidiary Guarantor that is
both a Wholly Owned Subsidiary and a Restricted Subsidiary,

 

(viii)        the Company and any Subsidiary Guarantor
from Incurring Indebtedness under Capitalized Lease Obligations or purchase
money obligations, in each case Incurred for the purpose of acquiring or
financing all or any part of the purchase price or cost of construction or
improvement of property or equipment used in the business of the Company or
such Subsidiary Guarantor, as the case may be, in an aggregate amount not to exceed
$20 million, and

 

(ix)           Indebtedness of the Company or any
Restricted Subsidiary in an aggregate principal amount at any time outstanding
not to exceed $20 million.

 

 

27

 

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

 

(d)           For
purposes of determining compliance with this Section 3.03, in the event an item
of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses of this Section 3.03, the Company,
in its sole discretion, shall classify such item of Indebtedness in any manner
that complies with this covenant and may from time to time reclassify such item
of Indebtedness in any manner in which such item could be Incurred at the time
of such reclassification.

 

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

 

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

 

Section
3.05.                                                Change of
Control.

 

(a)           Following
the occurrence of any Change of Control, the Company shall so notify the
Trustee in writing by delivery of an Officers’ Certificate and shall offer to
purchase (a “Change of Control Offer”) from all Holders, and shall
purchase from Holders accepting such Change of Control Offer on the date fixed
for the closing of such Change of Control Offer (the “Change of Control
Payment Date”), the outstanding principal amount of Notes at an offer price
(the “Change of Control Price”) in cash in an amount equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest, if
any, to the Change of Control Payment Date in accordance with the procedures
set forth in this Section 3.05.

 

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

 

(i)            that the Change of Control Offer is
being made pursuant to Section 3.05(a) hereof and the length of time the Change
of Control Offer will remain open;

 

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           Not
later than one Business Day after the Change of Control Payment Date in connection
with which the Change of Control Offer is being made, the Company will (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, 

 

 

29

 

(ii) deposit with the Paying Agent money sufficient, in immediately
available funds, to pay the purchase price of all Notes or portions thereof so
accepted and (iii) deliver to the Paying Agent an Officers’ Certificate
identifying the Notes or portions thereof accepted for payment by the
Company.  The Paying Agent will promptly
mail or deliver to Holders of Notes so accepted payment in an amount equal to
the Change of Control Price of the Notes purchased from each such Holder, and
the Company will execute and, upon receipt of an Officers’ Certificate of the
Company, the Trustee will promptly authenticate and mail or deliver to such
Holder a new Note equal in principal amount to any unpurchased portion of the
Note surrendered.  Any Notes not so
accepted will be promptly mailed or delivered by the Paying Agent at the Company’s
expense to the Holder thereof.  The Company
shall publicly announce the results of the Change of Control Offer promptly
after the Change of Control Payment Date. 
For purposes of this Section 3.05(d), the Company will choose a Paying
Agent which will not be the Company or a Subsidiary thereof.

 

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

 

Section 3.06.                                                Limitations on
Transactions with Stockholders and Affiliates.

 

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

 

The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any Affiliate Transaction involving or having a value of more than
$5 million, unless, in each case, such Affiliate Transaction has been approved
by a majority of the disinterested members of the Company’s Board of Directors.

 

The Company will not, and will not permit any of its Subsidiaries to,
enter into an Affiliate Transaction involving or having a value of more than
$20 million unless the Company has delivered to the Trustee an opinion of an
Independent Financial Advisor to the effect that the transaction is fair to the
Company or the relevant Subsidiary, as the case may be, from a financial point
of view.

 

Notwithstanding the foregoing, an Affiliate Transaction shall not
include (i) any contract, agreement or understanding with, or for the benefit
of, or plan for the benefit of, employees of the Company or its Subsidiaries
(in their capacity as such) that has been approved by the Company’s Board of
Directors, (ii) Capital Stock issuances to members of the Board of Directors,
officers and employees, of the Company or its Subsidiaries pursuant to plans
approved 

 

 

30

 

by the stockholders of the Company, (iii) any
Restricted Payment otherwise permitted under Section 3.02 hereof or (iv) any
transaction between the Company and a Restricted Subsidiary or a Restricted
Subsidiary and another Restricted Subsidiary.

 

Section
3.07.                                                Limitations on
Liens.

 

The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Liens, other than
Permitted Liens, on any of its or their assets, property, income or profits
therefrom unless contemporaneously therewith or prior thereto all payments due
under the 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. 
No Liens will be permitted to be created or suffered to exist on any
Indebtedness from the Company in favor of any Restricted Subsidiary and that
such Indebtedness will not be permitted to be sold, disposed of or otherwise
transferred.

 

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

 

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

 

 

31

 

Section
3.09.                                                Maintenance of
Consolidated Tangible Net Worth.

 

(a)           In
the event that the Consolidated Tangible Net Worth of the Company is less than
$85 million at the end of any two consecutive fiscal quarters (the last day of
the second fiscal quarter being referred to herein as the “Deficiency Date”),
within 30 days after the end of each such period or 60 days in the event that
the end of the period is the end of the Company’s fiscal year, the Company
shall so notify the Trustee in writing by delivery of an Officers’ Certificate
and will offer to purchase from all Holders (a “Net Worth Offer”), and
shall purchase from Holders accepting such Net Worth Offer on the date fixed
for the closing of such Net Worth Offer (the “Net Worth Offer Date”), 10%
of the original outstanding principal amount of the Notes (the “Net Worth
Amount”) at an offer price (the “Net Worth Offer Price”) in cash in
an amount equal to 100% of the aggregate principal amount thereof plus accrued
and unpaid interest, if any, to the Net Worth Offer Date; provided that
no such offer shall be required if, following such two fiscal quarters but
prior to the date the Company is required to make such offer, capital in cash
or cash equivalents is contributed to the Company in an Equity Offering
sufficient to increase the Company’s Consolidated Tangible Net Worth after
giving effect to such contribution to an amount equal to or greater than $85
million.  To the extent that the
aggregate amount of Notes tendered pursuant to a Net Worth Offer is less than
the Net Worth Amount relating thereto, then the Company may use the excess of
the Net Worth Amount over the amount of Notes tendered, or a portion thereof,
for general corporate purposes.  In no
event shall the Company’s failure to meet the Consolidated Tangible Net Worth
threshold at the end of any fiscal quarter be counted toward the making of more
than one Net Worth Offer.  The Company
may reduce the principal amount of Notes to be purchased pursuant to the Net
Worth Offer by subtracting 100% of the principal amount (excluding premium) of
Notes acquired by the Company or any Wholly Owned Subsidiary subsequent to the
Deficiency Date and surrendered for cancellation through purchase, redemption
(other than pursuant to this Section 3.09) or exchange, and that were not
previously used as a credit against any obligation to repurchase Notes pursuant
to this Section 3.09.

 

(b)           Subject
to the proviso contained in Section 3.09(a) above, in the event the Consolidated
Tangible Net Worth of the Company is less than $85,000,000 at the end of any
two consecutive fiscal quarters, within 30 days after the end of such period,
the Company (with notice to the Trustee) or the Trustee at the Company’s
request (and at the expense of the Company) will send or cause to be sent by
first-class mail, postage pre-paid, to all Persons who were Holders on the date
of the end of the second such consecutive fiscal quarter, at their respective
addresses appearing in the Security Register, a notice of such occurrence and
of each Holder’s rights arising as a result thereof.  Such notice will contain all instructions and
materials necessary to enable Holders to tender their Notes to the
Company.  Such notice, which will govern
the terms of the Net Worth Offer, will state:

 

(i)            that the Net Worth Offer is being
made pursuant to Section 3.09(a) hereof and the length of time such Net Worth
Offer will remain open;

 

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

 

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

 

 

32

 

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

 

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

 

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

 

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

 

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

 

(ix)           information concerning the period and
details of the events requiring the Net Worth Offer and the business of the
Company which the Company in good faith believes will enable such Holders to
make an informed decision (which at a minimum will include (A) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Sales otherwise described in the offering materials relating to the Net
Worth Offer (or corresponding successor reports) (or in the event the Company
is not required to prepare any of the foregoing Forms, the comparable
information required pursuant to Section 3.11 hereof); provided that the
Company may, at its option, incorporate by reference any such filed reports in
the notice, (B) a description of material developments in the Company’s
business subsequent to the date of the latest of such reports, and (C) if
material, appropriate pro forma financial information).

 

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

 

 

33

 

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

 

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

 

Section
3.10.                                                Limitations on
Mergers and Consolidations.

 

Section 5.01 of the Indenture is hereby replaced in
its entirety by the following:

 

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

 

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

 

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

 

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

 

 

34

 

case may be, would be at
least equal to the Consolidated Tangible Net Worth of the Company immediately
prior to such transaction,

 

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

 

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

 

(b)           Upon
any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Supplemental Indenture or the Notes in
accordance with this Section 3.10, upon assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual payment of the
principal of, premium, if any, and interest on all of the Notes and the due and
punctual performance and observance of all the covenants and conditions of this
Supplemental Indenture to be performed or observed by the Company, the
Successor formed by such consolidation or into or with which the Company is
merged or to which such sale, lease, conveyance or other disposition or
assignment is made will succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Supplemental Indenture with
the same effect as if such Successor has been named as the Company herein and
such Successor may cause to be signed and may issue in its own name or in the
name of the Company, any or all Notes issuable hereunder and the predecessor
Company, in the case of a sale, lease, conveyance or other disposition or assignment,
will be released from all obligations under this Supplemental Indenture and the
Notes.

 

(c)           The
foregoing provisions shall not apply to a transaction involving the
consolidation or merger of a Subsidiary Guarantor with or into another Person,
or the sale, lease, conveyance or other disposition of all or substantially all
of the assets of such Subsidiary Guarantor, that results in such Subsidiary
Guarantor being released from its Subsidiary Guarantee as provided under
Section 4.04.

 

(d)           Any
consolidation, merger, sale, lease or conveyance permitted under subsection (a)
above is also subject to the condition that the Trustee receive an Officers’
Certificate and an Opinion of Counsel to the effect that any such
consolidation, merger, sale, lease or conveyance, and the assumption by any
successor corporation, complies with the provisions of this Section 3.10 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

 

 

35

 

Section
3.11.                                                Reports.

 

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

 

Section
3.12.                                                Subsidiary
Guarantees.

 

After the date hereof, the Company will cause each of its Subsidiaries
that is or becomes a Restricted Subsidiary (other than, in the Company’s
discretion, any Restricted Subsidiary the assets of which have a book value of
not more than $5,000,000) to be a Subsidiary Guarantor hereunder in accordance
with the provisions of Section 4.03 hereof.  The Company may, in its discretion, cause any
Unrestricted Subsidiary to become a Subsidiary Guarantor hereunder in the same
manner.

 

Section
3.13.                                                Limitation of
Applicability of Certain Covenants if the Notes Are Rated Investment Grade.

 

(a)           The
Company and its Restricted Subsidiaries’ obligations to comply with the provisions
of the Supplemental Indenture under this Article 3 (except for Sections 3.05,
3.07, 3.10 (other than clauses (iii) and (iv) of subsection (a) thereof) and 3.11
hereof) will terminate (such terminated covenants, the “Extinguished
Covenants”) and cease to have any further effect from and after the first
date when the Notes issued under this Supplemental Indenture are rated
Investment Grade; provided that if the Notes subsequently cease to
be rated Investment Grade, then, from and after the time the Notes cease to be
rated Investment Grade, the Company and its Restricted Subsidiaries’ obligation
to comply with the Extinguished Covenants shall be reinstated; provided further
that from and after the time the Notes are rated Investment Grade, no
Restricted Subsidiary that conducts homebuilding or land development activities
or owns Capital Stock in any Subsidiary that conducts homebuilding or land
development activities may be designated an Unrestricted Subsidiary.

 

(b)           Notwithstanding
the foregoing, in the event of any such reinstatement, no action taken or
omitted to be taken by the Company or any of its Subsidiaries prior to such
reinstatement shall give rise to a Default or Event of Default under the Supplemental
Indenture upon reinstatement; provided
that (i) with respect to Restricted Payments made after any such reinstatement,

 

 

36

 

the amount of Restricted Payments made after April 17, 2002 will be
calculated as though Section 3.02 had been in effect during the entire period
after such date and (ii) with respect to Indebtedness, all Indebtedness
Incurred from the date of the achievement of such Investment Grade ratings to
the date of any such reinstatement will be classified as having been Incurred
pursuant to and permitted under the Consolidated Fixed Charge Coverage Ratio or
one of the clauses set forth in Section 3.03(b) (to the extent such
Indebtedness would be permitted to be Incurred thereunder as of the date of
such reinstatement and after giving effect to Indebtedness Incurred prior to
the date of achievement of such Investment Grade rating and outstanding on the
date of such reinstatement).  To the
extent any Indebtedness would not be permitted to be Incurred pursuant to the
Consolidated Fixed Charge Coverage Ratio or any of the clauses set forth in Section
3.03(b), such Indebtedness will be deemed to have been outstanding on the Issue
Date, so that it is classified as Existing Indebtedness and permitted to be refinanced
as Refinancing Indebtedness under Section 3.03(b)(i)(A).

 

ARTICLE FOUR

Subsidiary Guarantees

Section
4.01.                                                Subsidiary
Guarantees of Notes.

 

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

 

Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or the Indenture or this Supplemental Indenture,
the absence of any action to enforce the same, any waiver or consent by any
holder of the Notes with respect to any provisions hereof or thereof, any
release of any other Subsidiary Guarantor, the recovery of any judgment against
the Company, 

 

 

37

 

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

 

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

 

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

 

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

 

Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by each Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for 

 

 

38

 

purposes of the Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law.  To effectuate the
foregoing intention, the Holders and each Subsidiary Guarantor hereby
irrevocably agree that the obligations of each Subsidiary Guarantor under the
Subsidiary Guarantees shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of each Subsidiary
Guarantor, result in the obligations of each Subsidiary Guarantor under the
Subsidiary Guarantees not constituting such fraudulent transfer or conveyance.

 

Section
4.02.                                                Execution and
Delivery of Subsidiary Guarantee.

 

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

 

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

 

If an Officer of a Subsidiary Guarantor whose signature is on this
Supplemental Indenture or a Note no longer holds that office at the time the
Trustee authenticates such Note or at any time thereafter, such Subsidiary
Guarantor’s Subsidiary Guarantee of such Note shall be valid nevertheless.

 

The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Subsidiary Guarantee
set forth in this Supplemental Indenture on behalf of the Subsidiary Guarantor.

 

Section
4.03.                                                Additional
Subsidiary Guarantors.

 

Any Person may become a Subsidiary Guarantor by executing and
delivering to the Trustee (a) a supplemental indenture in form and substance
satisfactory to the Trustee which subjects such Person to the provisions of
this Supplemental Indenture as a Subsidiary Guarantor, and (b) an opinion of
Counsel to the effect that such supplemental indenture has been duly authorized
and executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning fraudulent conveyance laws, creditors’ rights and equitable
principles as may be acceptable to the Trustee in its discretion).

 

Section
4.04.                                                Release of a
Subsidiary Guarantor.

 

(a)           Except
in the case where the prohibition on transfer in Section 3.10 is applicable,
if all or substantially all of the assets of any Subsidiary Guarantor or all of
the capital stock of any Subsidiary Guarantor is sold (including by issuance or
otherwise) by the Company or any of its Subsidiaries in a transaction constituting
an Asset Sale, and if the Net Proceeds from 

 

 

39

 

such Asset Sale are used in accordance with Section 3.01, then such
Subsidiary Guarantor (in the event of a sale or other disposition of all of the
capital stock of such Subsidiary Guarantor) or the corporation acquiring such
assets (in the event of a sale or other disposition of all or substantially all
of the assets of such Subsidiary Guarantor) shall be deemed automatically and
unconditionally released and discharged from all obligations under this Article
Four without any further action required on the part of the Trustee or any
Holder, provided that each such Subsidiary Guarantor (or its assets) is
sold or disposed of in accordance with Section 3.01.

 

(b)           Upon
the release of the guarantee by a Subsidiary Guarantor under all then outstanding
Applicable Debt, at any time after the suspension of the Extinguished Covenants
pursuant to Section 3.13 hereof, the Subsidiary Guarantee of such Subsidiary Guarantor
under the Supplemental Indenture will be released and discharged at such time
and no Restricted Subsidiary thereafter acquired or created will be required to
be a Subsidiary Guarantor; provided that the foregoing shall not apply
to any release of any Subsidiary Guarantor done in contemplation of, or in
connection with, any cessation of the Notes being rated Investment Grade.  In the event that (i) any such released Subsidiary
Guarantor thereafter guarantees any Applicable Debt (or if any released
guarantee under any Applicable Debt is reinstated or renewed) or (ii) the Extinguished
Covenants cease to be suspended pursuant to Section 3.13 hereof, then any such
released Subsidiary Guarantor and any other Restricted Subsidiary of the
Company then existing will guarantee the Notes on the terms and conditions set
forth in the Supplemental Indenture.  For
purposes of this clause (b), Applicable Debt secured by a Lien on such Restricted
Subsidiary’s Property or issued by such Restricted Subsidiary shall be deemed
guaranteed by such Restricted Subsidiary.

 

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

 

(d)           Upon
the designation of a Subsidiary Guarantor, which is a Restricted Subsidiary, as
an Unrestricted Subsidiary, in accordance with the terms of this Indenture,
such Subsidiary Guarantor shall be deemed automatically and unconditionally
released and discharged from its Subsidiary Guarantee and all obligations under
this Article Four, without any further action required on the part of the
Trustee or any Holder, provided
that, such Subsidiary Guarantor shall remain and be liable under its Subsidiary
Guarantee and its obligations under this Article Four, notwithstanding its
designation as an Unrestricted Subsidiary, if the Company provides written
notice to the Trustee stating that such Subsidiary Guarantor shall remain and
be liable under its Subsidiary Guarantee and its obligations under this Article
Four.

 

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

 

Except as set forth in Article Three hereof and this Section 4.04,
nothing contained in this Supplemental Indenture or in any of the Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor or 

 

 

40

 

shall prevent any sale or conveyance of the property
of a Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor.

 

Section
4.05.                                                Waiver of
Subrogation.

 

Each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company or any of its
Subsidiaries that arise from the existence, payment, performance or enforcement
of such Subsidiary Guarantor’s obligations under this Subsidiary Guarantee and
this Supplemental Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, and any right to participate
in any claim or remedy of any Holder of Notes against the Company or any of its
Subsidiaries, whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including, without limitation, the right
to take or receive from the Company or any of its Subsidiaries, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights.  If any amount shall be paid to any Subsidiary
Guarantor in violation of the preceding sentence and the Notes shall not have
been paid in full, such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for the benefit of,
the Holders of the Notes, and shall forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the Notes, whether
matured or unmatured, in accordance with the terms of this Supplemental
Indenture.  Each Subsidiary Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Supplemental Indenture and that the
waiver set forth in this Section 4.05 is knowingly made in contemplation of
such benefits.

 

ARTICLE FIVE

 

Miscellaneous

Section
5.01.                                                Events of
Default.

 

Sections 6.01 and 6.02 of the Indenture are hereby replaced in
their entirety by the following:

 

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

 

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

 

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

 

 

41

 

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

 

(iv)          the acceleration of any Indebtedness
(other than Non-Recourse Indebtedness) of the Company or any of its Subsidiaries
that has an outstanding principal amount of $25 million or more in the aggregate;

 

(v)           the failure by the Company or any of
its Subsidiaries to make any principal or interest payment in respect of Indebtedness
(other than Non-Recourse Indebtedness) of the Company or any of its
Subsidiaries with an outstanding aggregate amount of $25 million or more within
five days of such principal or interest payment becoming due and payable (after
giving effect to any applicable grace period set forth in the documents
governing such Indebtedness); provided that if such failure to pay shall
be remedied, waived or extended, then the Event of Default hereunder shall be
deemed likewise to be remedied, waived or extended without further action by
the Company;

 

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

 

(vii)         the Company or any Material Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:

 

(A)                              commences a
voluntary case,

 

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

 

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

 

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

 

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

 

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

 

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

 

 

42

 

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

 

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

 

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

 

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

 

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

 

(e)           In
the event that the maturity of the Notes is accelerated pursuant to Section
5.01(d) hereof, 100% of the principal amount of the Notes (or, in the case of a
default under Section 5.01(b)(ii) or (iii) hereof resulting from a breach of
the covenant set forth in Section 3.05 hereof, 101% of the principal amount of
the Notes) will become due and payable plus accrued interest, if any, to the
date of payment.

 

 

43

 

(f)            The
Company shall deliver to the Trustee a quarterly statement regarding compliance
with the provisions under this Supplemental Indenture, and include in such
statement, if any Officer of the Company is aware of any Default or Event of
Default, a statement specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.  In addition, the Company shall deliver to the
Trustee prompt written notice of the occurrence of any Default or Event of Default
and any other development, financial or otherwise, which might materially
affect its business, properties or affairs or the ability of the Company to
perform its obligations under this Supplemental Indenture.

 

Section
5.02.                                                Amendment,
Supplement and Waiver.

 

Subject to certain exceptions, this Supplemental Indenture or the Notes
may be amended or supplemented with the consent (which may include consents
obtained in connection with a tender offer or exchange offer for Notes) of the
Holders of at least a majority in principal amount of the Notes then
outstanding, and any existing Default or Event of Default (other than any
continuing Default or Event of Default in the payment of interest on or the principal
of the Notes) under, or compliance with any provision of, the Indenture or this
Supplemental Indenture may be waived with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for
Notes) of the Holders of a majority in principal amount of the Notes then outstanding.  Without the consent of any Holder, the
Company, the Subsidiary Guarantors and the Trustee may amend this Supplemental
Indenture or the Notes or waive any provision of the Indenture or this Supplemental
Indenture to cure any ambiguity, defect or inconsistency, to comply with
Section 3.10; to provide for uncertificated Notes in addition to certificated
Notes; to make any change that does not adversely affect the legal rights under
this Supplemental Indenture of any Holder; to comply with or qualify the
Indenture under the Trust Indenture Act; or to reflect a Subsidiary Guarantor
ceasing to be liable on the Subsidiary Guarantees because it is no longer a
Subsidiary of the Company.

 

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

 

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

 

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

 

(iii)          reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to redemption
under the “Optional Redemption” section set forth in the Notes or with respect
to mandatory offers to repurchase Notes pursuant to Sections 3.01, 3.05 and
3.09 of this Supplemental Indenture,

 

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

 

(v)           make any change in the “Waiver of
Past Defaults” or “Right of Holders to Receive Payment” or, in part, the “With
Consent of Holders” sections set forth in the Indenture,

 

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

 

 

44

 

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

 

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

 

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

 

Section
5.03.                                                Indenture.

 

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

 

Section
5.04.                                                Governing Law.

 

The laws of the State of New York shall govern this Supplemental
Indenture, the Securities of the Series created hereby and the Subsidiary
Guarantees thereof.

 

Section
5.05.                                                No Adverse
Interpretation of Other Agreements.

 

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

 

Section
5.06.                                                Successors and
Assigns.

 

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

 

Section
5.07.                                                Duplicate
Originals.

 

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

 

Section
5.08.                                                Severability.

 

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

 

 

45

 

[Signature Pages Follow]

 

 

46

SIGNATURES

 

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

 

	
   

  	
   

  BEAZER HOMES USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President &

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APRIL CORPORATION

  BEAZER ALLIED COMPANIES HOLDINGS, INC.

  BEAZER GENERAL SERVICES, INC.

  BEAZER HOMES CORP.

  BEAZER HOMES HOLDINGS CORP.

  BEAZER HOMES INDIANA HOLDINGS CORP.

  BEAZER HOMES SALES, INC.

  BEAZER HOMES TEXAS HOLDINGS, INC.

  BEAZER REALTY CORP.

  BEAZER REALTY, INC.

  BEAZER REALTY LOS ANGELES, INC.

  BEAZER REALTY SACRAMENTO, INC.

  BEAZER/SQUIRES REALTY, INC.

  HOMEBUILDERS TITLE SERVICES OF
            VIRGINIA, INC.

  HOMEBUILDERS TITLE SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

S-1

 

	
   

  	
  BEAZER HOMES INDIANA, LLP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEAZER HOMES INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEAZER HOMES TEXAS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  

 

 

S-2

 

	
   

  	
  BEAZER REALTY SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEAZER SPE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES HOLDINGS CORP., 

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BH BUILDING PRODUCTS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BH PROCUREMENT SERVICES, LLC, 

  its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  

 

 

S-3

 

	
   

  	
  BH PROCUREMENT SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PARAGON TITLE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC, 

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXAS LONE STAR TITLE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., 

  its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

S-4

 

	
   

  	
  TRINITY HOMES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS LLC, 

  its manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEAZER COMMERCIAL HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP. its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEAZER CLARKSBURG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  

 

 

S-5

 

	
   

  	
  ARDEN PARK VENTURES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James O’Leary

  
	
   

  	
   

  	
  Name:

  	
  James O’Leary

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

S-6

 

U.S. BANK NATIONAL ASSOCIATION, 

as Trustee

 

 

	
  By:

  	
  /s/ R. Prokosch

  	
   

  
	
   

  	
  Name:

  	
  Richard Prokosch

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

S-7

 

Exhibit A

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE 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 NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.17 OF THE INDENTURE REFERRED TO HEREIN.(1)

(1) This paragraph should be included if the Note is
issued in global form.

 

THE
NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER
EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF

 

 

A-1

 

THE NOTE EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF BEAZER HOMES USA, INC. THAT (A) SUCH NOTE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”)
THAT IS PURCHASING AT LEAST $100,000 OF NOTES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR (AND BASED UPON AN OPINION OF
COUNSEL IF BEAZER HOMES USA, INC. SO REQUESTS) OR (E) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
PROVIDED THAT IN THE CASE OF A TRANSFER UNDER CLAUSE (E) SUCH TRANSFER IS
SUBJECT TO THE RECEIPT BY THE TRUSTEE (AND BEAZER HOMES USA, INC., IF IT SO
REQUESTS) OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO
BEAZER HOMES USA, INC. OR ANY OF ITS SUBSIDIARIES OR (3) UNDER AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND THE INDENTURE GOVERNING THE NOTES AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE. IF ANY RESALE OR OTHER TRANSFER OF ANY NOTE IS PROPOSED TO
BE MADE UNDER CLAUSE (A)(1)(D) ABOVE WHILE THESE TRANSFER RESTRICTIONS ARE IN
FORCE THEN THE TRANSFEROR SHALL DELIVER A LETTER FROM THE TRANSFEREE TO BEAZER
AND THE TRUSTEE WHICH SHALL PROVIDE, AMONG OTHER THINGS, THAT THE TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS ACQUIRING THE NOTES FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT.

 

A-2

 

	
  No.

  	
   

  	
  CUSIP No.:             

  

 

8.125% Senior Notes due 2016,
Series A

 

BEAZER HOMES USA, INC.

a Delaware corporation

 

promises to pay to

 

or registered assigns

	
  the
  principal sum of

  	
   

  	
  [Dollars] on June 15, 2016

  

 

8.125% Senior Notes due 2016

Interest Payment Dates: June 15 and December 15, commencing on December
15, 2006

Record Dates: June 1 and December 1

Authenticated:                                                                             Dated:

 

[The Remainder of This Page Has
Intentionally Been Left Blank.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A-3

 

IN WITNESS WHEREOF, the Company has caused this Note to be executed as
of the date first above written.

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

U.S.
BANK NATIONAL ASSOCIATION, as Trustee, 

certifies that this is one of the Notes referred to in the 

within mentioned Indenture.

 

 

	
  By:

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

A-4

 

BEAZER HOMES USA, INC.

 

8.125% Senior Notes due 2016,
Series A

 

1.             Interest.

 

BEAZER HOMES USA, 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 June 15 and
December 15 of each year, commencing December 15, 2006, 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 June 6, 2006. 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 June 1 and December 1. 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, U.S. Bank National Association (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 may act as Paying Agent, Registrar or co-Registrar.

 

4.             Indenture.

 

The Company issued the Notes under an Indenture dated as of
April 17, 2002 (as amended or supplemented, the “Indenture”) among
the Company, the Subsidiary Guarantors and the Trustee. The terms of the Notes
and the Subsidiary Guarantees include those stated in the Indenture (including
those terms set forth in the Authorizing Resolution or supplemental indenture
pertaining to the Notes 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 Subsidiary
Guarantees are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of them. The Notes include the
Initial Notes and the Exchange Notes (each as defined in the Indenture) issued
in exchange for the Initial Notes pursuant to the Registration Rights Agreement
(as hereinafter defined).

 

 

A-5

 

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: Beazer Homes
USA, Inc., 1000 Abernathy Road, Suite 1200, Atlanta, Georgia 30328, Attention: President.

 

5.             Optional
Redemption.

 

At any time and from time to time, we may at our option redeem the
Notes, in whole or in part, at a redemption price equal to 100% of the
principal amount of the Notes to be redeemed plus the Applicable Premium as of,
and accrued and unpaid interest to, the redemption date (subject to the right
of Holders on the relevant record date to receive interest due on the relevant
interest payment date). Notice of such redemption must be mailed by first-class
mail to each Holder’s registered address, not less than 30 nor more than 60
days prior to the redemption date.

 

“Applicable Premium” means, with respect to a Note at any redemption
date, the greater of (i) 1.00% of the principal amount of such Note and (ii)
the excess of (A) the present value at such redemption date of (1) the
principal amount of such Note plus (2) all required remaining scheduled
interest payments due on such Note through June 15, 2016 (but excluding accrued
and unpaid interest to the redemption date), computed using a discount rate
equal to the Adjusted Treasury Rate, over (B) the principal amount of such Note
on such redemption date.

 

“Adjusted Treasury Rate” means, with respect to any redemption date,
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated “H.15(519)” or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption “Treasury Constant Maturities”,
for the maturity corresponding to the Comparable Treasury Issue (if no maturity
is within three months before or after June 15, 2016, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Adjusted Treasury Rate shall be interpolated
or extrapolated from such yields on a straight line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date, in each case
calculated on the third Business Day immediately preceding the redemption date,
plus 0.50% per annum.

 

“Comparable Treasury Issue” means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Notes from the redemption date to June 15, 2016, that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of a
maturity most nearly equal to June 15, 2016.

 

 

A-6

 

“Comparable Treasury Price” means, with respect to any redemption date,
if clause (ii) of the Adjusted Treasury Rate is applicable, the average of
three, or such lesser num-ber as is obtained by the Trustee, Reference Treasury
Dealer Quotations for such redemption date.

 

“Quotation Agent” means the Reference Treasury Dealer selected by the
Trustee after consultation with the Company.

 

“Reference Treasury Dealer” means UBS Securities LLC and its successors
and assigns, and two other nationally recognized investment banking firms
selected by the Company that are primary U.S. Government securities dealers.

 

“Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day immediately preceding such redemption
date.

 

In the event less than all of the Notes are to be redeemed at any time,
selection of the Notes to be redeemed will be made by the Trustee from among
the outstanding Notes on a pro rata basis,
by lot or by any other method permitted by the Indenture. Notice of redemption
will be mailed at least 15 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. On and after the redemption date, interest will cease to accrue on
the Notes or portions thereof called for redemption.

 

The Indenture requires the Company

 

(i)            to offer to
purchase all of the outstanding Notes upon a Change of Control of the Company,

 

(ii)           to offer to
purchase a portion of the outstanding Notes using Net Proceeds neither used to
repay certain Indebtedness nor used or invested as provided in the Supplemental
Indenture or

 

(iii)          to offer to
purchase 10% of the original outstanding principal amount of the Notes in the
event that, at the end of any two consecutive fiscal quarters, the Company’s
Consolidated Tangible Net Worth is less than $85 million; provided
that no such offer shall be required if, following such two fiscal quarters but
prior to the date the Company is required to make such offer, capital in cash
or cash equivalents is contributed to the Company in an Equity Offering sufficient
to increase the Company’s Consolidated Tangible Net Worth after giving effect
to such contribution to an amount equal to or greater than $85 million.

 

 

A-7

 

 

6.             Registration
Rights Agreement.

 

The Holder of this Note is entitled to the benefits of a Registration
Rights Agreement, dated as of June 6, 2006, among the Company, the Subsidiary
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) the Exchange Offer is not completed on or before the 210th
calendar day following the Issue Date or, if that day is not a Business Day,
then the next day that is a Business Day; or (ii) the Shelf Registration
Statement is required to be filed but is not filed or declared effective within
the time periods required by the Registration Rights Agreement or is declared
effective but thereafter ceases to be effective or usable (subject to certain
exceptions) (each such event referred to in clauses (i) and (ii), a “Registration
Default”), the interest rate borne by the Notes will be increased by 0.25%
per annum upon the occurrence of a Registration Default. This rate will
continue to increase by 0.25% each 90 day period that the Liquidated Damages
(as defined below) continue to accrue under any such circumstance. However, the
maximum total increase in the interest rate will in no event exceed one percent
(1.0%) per year. The increase in the interest rate on the Notes is referred to
as “Liquidated Damages.” Such interest is payable in addition to any
other interest payable from time to time with respect to the Initial Notes and
the Exchange Notes in cash on each interest payment date to the Holders of
record for such interest payment date.

 

7.             Denominations,
Transfer, Exchange.

 

The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may transfer or exchange
Notes 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.

 

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.

 

 

A-8

 

10.           Amendment,
Supplement, Waiver.

 

Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent (which may include consents obtained
in connection with a tender offer or exchange offer for Notes) of the Holders
of at least a majority in principal amount of the Notes then outstanding, and
any existing Default or Event of Default (other than any continuing Default or
Event of Default in the payment of interest on or the principal of the Notes)
under, or compliance with any provision of, the Indenture may be waived with
the consent (which may include consents obtained in connection with a tender
offer or exchange offer for Notes) of the Holders of a majority in principal
amount of the Notes then outstanding. Without the consent of any Holder, the
Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or
the Notes or waive any provision of the Indenture to cure any ambiguity, defect
or inconsistency, to comply with Section 3.10 of the Supplemental Indenture; to
provide for uncertificated Notes in addition to certificated Notes; to make any
change that does not adversely affect the legal rights under the Indenture of
any Holder; to comply with or qualify the Indenture under the Trust Indenture
Act; or to reflect a Subsidiary Guarantor ceasing to be liable on the Subsidiary
Guarantees because it is no longer a Subsidiary of the Company.

 

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.

 

U.S. Bank National Association, 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 Securityholder 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-9

 

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 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-10

 

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 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) 

  	
  o

  	
   

  	
  to the Company or a subsidiary thereof; or

  
	
  (2) 

  	
  o

  	
   

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

  
	
  (3) 

  	
  o

  	
   

  	
  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) 

  	
  o

  	
   

  	
  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) 

  	
  o

  	
   

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

  
	
  (6) 

  	
  o

  	
   

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

  
	
  (7) 

  	
  o

  	
   

  	
  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”):

 

o            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 (4)) 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.

 

	
  Date:

  	
   

  	
   

  	
  Signed:

  	
   

  
	
   

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

  
	
   

  	
   

  

 

 

	
  Signature Subsidiary 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.

 

 

 

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

  

 

 

 

[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]

 

GUARANTEE

 

Beazer Commercial Holdings, LLC, Beazer Clarksburg, LLC, Beazer General
Services, Inc., Beazer Homes Corp., Beazer/Squires Realty, Inc., Beazer Homes
Sales, Inc., Beazer Homes Investments, LLC, Beazer Realty Corp., Beazer Homes
Holdings Corp., Beazer Homes Indiana Holdings Corp., Beazer Homes Texas Holdings,
Inc., Beazer Homes Texas, L.P., Beazer Homes Indiana, LLP, April Corporation,
Beazer SPE, LLC, Beazer Realty, Inc., Beazer Realty Services, LLC, Beazer
Realty Los Angeles, Inc., Beazer Realty Sacramento, Inc., Beazer Title Agency
of Arizona, LLC, Beazer Title Agency of Nevada, LLC, BH Building Products, LP,
BH Procurement Services, LLC, Homebuilders Title Services of Virginia, Inc.,
Homebuilders Title Services, Inc., Texas Lone Star Title, L.P., Beazer Allied
Companies Holdings, Inc., Paragon Title, LLC, Trinity Homes LLC, Beazer Homes Indiana, LLP, Beazer Homes Indiana
Holdings Corp., Beazer Realty Services, LLC, Beazer Realty Los Angeles, Inc.,
Beazer Realty Sacramento, Inc., BH Products, LP, BH Procurement Services, LLC, Beazer
General Services, Inc., Beazer Commercial Holdings, LLC, Beazer Clarksburg, LLC
and Arden Park Ventures, LLC (the “Subsidiary Guarantors”) have
unconditionally guaranteed, jointly and severally (such guarantee by each
Subsidiary Guarantor being referred to herein as the “Subsidiary 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 Subsidiary Guarantors shall have any
liability under the Subsidiary 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 Subsidiary Guarantees.

 

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

 

 

 

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

 

	
   

  	
  SUBSIDIARY GUARANTORS:

   

   

  APRIL CORPORATION

  BEAZER ALLIED COMPANIES HOLDINGS, INC.

  BEAZER GENERAL SERVICES, INC.

  BEAZER HOMES CORP.

  BEAZER HOMES HOLDINGS CORP.

  BEAZER HOMES INDIANA HOLDINGS CORP.

  BEAZER HOMES SALES, INC.

  BEAZER HOMES TEXAS HOLDINGS, INC.

  BEAZER REALTY CORP.

  BEAZER REALTY, INC.

  BEAZER REALTY LOS ANGELES, INC.

  BEAZER REALTY SACRAMENTO, INC.

  BEAZER/SQUIRES REALTY, INC.

  HOMEBUILDERS TITLE SERVICES OF
            VIRGINIA, INC.

  HOMEBUILDERS TITLE SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  

 

 

 

	
   

  	
  BEAZER HOMES INDIANA, LLP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER HOMES INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER HOMES TEXAS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
   

  	
  BEAZER REALTY SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER SPE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES HOLDINGS CORP., its Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BH BUILDING PRODUCTS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BH PROCUREMENT SERVICES, LLC, 

  its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., 

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
   

  	
  BH PROCUREMENT SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  PARAGON TITLE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC, 

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  TEXAS LONE STAR TITLE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
   

  	
  TRINITY HOMES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS LLC, its manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER COMMERCIAL HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP. its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER CLARKSBURG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

	
   

  	
  ARDEN PARK VENTURES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

 

Exhibit B

 

	
  No.

  	
   

  	
  CUSIP No.: 

  	
   

  

 

8.125% Senior Notes due 2016,
Series B

BEAZER HOMES USA, INC.

a Delaware corporation

promises
to pay to

 

or registered assigns

	
  the
  principal sum of

  	
   

  	
  [Dollars] on June 15, 2016

  

 

8.125% Senior Notes due 2016

Interest Payment Dates:  June 15
and December 15, commencing on December 15, 2006

Record Dates:  June 1 and
December 1

 

Authenticated:                                                                             Dated:

 

[The Remainder of This Page Has
Intentionally Been Left Blank.]

 

 

 

 

 

 

 

B-1

 

IN WITNESS WHEREOF, the Company has caused this Note to be executed as
of the date first above written.

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

U.S.
BANK NATIONAL ASSOCIATION, as Trustee, 

certifies that this is one of the Notes referred to in the 

within mentioned Indenture.

 

 

	
  By:

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

B-2

 

BEAZER HOMES USA, INC.

 

8.125% Senior Notes due 2016,
Series B

 

1.             Interest.

 

BEAZER HOMES USA, 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 June 15 and December 15 of each year, commencing
December 15, 2006, 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 June 6, 2006. 
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 January 1 and July
1.  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, U.S. Bank National Association (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 may act as Paying Agent, Registrar or co-Registrar.

 

4.             Indenture.

 

The Company issued the Notes under an Indenture dated as of April 17,
2002 (as amended or supplemented, the “Indenture”) among the Company,
the Subsidiary Guarantors and the Trustee. 
This Note is one of the duly authorized Exchange Notes of the Company
designated as its 8.125% Senior Notes due 2016 (the “Exchange Notes”).  The terms of the Notes and the Subsidiary
Guarantees include those stated in the Indenture (including those terms set
forth in the Authorizing Resolution or supplemental indenture pertaining to the
Notes 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 Subsidiary Guarantees are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
them.  The Notes include the Initial
Notes and the Exchange Notes (each as defined in the Indenture) issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement.

 

 

B-3

 

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:  Beazer
Homes USA, Inc., 1000 Abernathy, Suite 1200, Atlanta, Georgia 30328,
Attention:  President.

 

5.             Optional
Redemption.

 

At any time and from time to time, we may at our option redeem the
Notes, in whole  or in part, at a
redemption price equal to 100% of the principal amount of the Notes to be
redeemed plus the Applicable Premium as of, and accrued and unpaid interest to,
the redemption date (subject to the right of Holders on the relevant record
date to receive interest due on the relevant interest payment date).  Notice of such redemption must be mailed by
first-class mail to each Holder’s registered address, not less than 30 nor more
than 60 days prior to the redemption date.

 

“Applicable
Premium” means, with respect to a Note at any redemption
date, the greater of (i) 1.00% of the principal amount of such Note and (ii)
the excess of (A) the present value at such redemption date of (1) the
principal amount of such Note plus (2) all required remaining scheduled
interest payments due on such Note through June 15, 2016 (but excluding accrued
and unpaid interest to the redemption date), computed using a discount rate
equal to the Adjusted Treasury Rate, over (B) the principal amount of such Note
on such redemption date.

 

“Adjusted
Treasury Rate” means, with respect to any redemption date,
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated “H.15(519)” or any successor publication which
is published weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption “Treasury Constant Maturities”,
for the maturity corresponding to the Comparable Treasury Issue (if no maturity
is within three months before or after June 15, 2016, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Adjusted Treasury Rate shall be interpolated
or extrapolated from such yields on a straight line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date, in each case
calculated on the third Business Day immediately preceding the redemption date,
plus 0.50% per annum.

 

“Comparable
Treasury Issue” means the United States Treasury security selected
by the Quotation Agent as having a maturity comparable to the remaining term of
the Notes from the redemption date to June 15, 2016, that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a maturity most nearly equal
to June 15, 2016.

 

 

B-4

 

“Comparable
Treasury Price” means, with respect to any redemption date,
if clause (ii) of the Adjusted Treasury Rate is applicable, the average of
three, or such lesser number as is obtained by the Trustee, Reference Treasury
Dealer Quotations for such redemption date.

 

“Quotation
Agent” means the Reference Treasury Dealer selected by the
Trustee after consultation with the Company.

 

“Reference
Treasury Dealer” means UBS Securities LLC and its successors
and assigns, and two other nationally recognized investment banking firms
selected by the Company that are primary U.S. Government securities dealers.

 

“Reference
Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day immediately preceding such redemption
date.

 

In the event less than all of the Notes are to be redeemed at any time,
selection of the Notes to be redeemed will be made by the Trustee from among
the outstanding Notes on a pro rata basis,
by lot or by any other method permitted by the Indenture.  Notice of redemption will be mailed at least
15 days but not more than 60 days before the redemption date to each Holder
whose Notes are be redeemed at the registered address of such Holder.  On and after the redemption date, interest
will cease to accrue on the Notes or portions thereof called for redemption.

 

The Indenture requires the Company

 

(i)      to offer to purchase all
of the outstanding Notes upon a Change of Control of the Company,

 

(ii)     to offer to purchase a
portion of the outstanding Notes using Net Proceeds neither used to repay
certain Indebtedness nor used or invested as provided in the Supplemental
Indenture or

 

(iii)    to offer to purchase 10%
of the original outstanding principal amount of the Notes in the event that, at
the end of any two consecutive fiscal quarters, the Company’s Consolidated
Tangible Net Worth is less than $85 million; provided
that no such offer shall be required if, following such two fiscal quarters but
prior to the date the Company is required to make such offer, capital in cash
or cash equivalents is contributed to the Company in an Equity Offering
sufficient to increase the Company’s Consolidated Tangible Net Worth after
giving effect to such contribution to an amount equal to or greater than $85
million.

 

 

B-5

 

6.             Denominations,
Transfer, Exchange.

 

The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. 
A Holder may transfer or exchange Notes 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 (which may include consents obtained
in connection with a tender offer or exchange offer for Notes) of the Holders
of at least a majority in principal amount of the Notes then outstanding, and
any existing Default or Event of Default (other than any continuing Default or
Event of Default in the payment of interest on or the principal of the Notes)
under, or compliance with any provision of, the Indenture may be waived with
the consent (which may include consents obtained in connection with a tender
offer or exchange offer for Notes) of the Holders of a majority in principal
amount of the Notes then outstanding. 
Without the consent of any Holder, the Company, the Subsidiary
Guarantors and the Trustee may amend the Indenture or the Notes or waive any
provision of the Indenture to cure any ambiguity, defect or inconsistency, to
comply with Section 3.10 of the Supplemental Indenture; to provide for
uncertificated Notes in addition to certificated Notes; to make any change that
does not adversely affect the legal rights under the Indenture of any Holder;
to comply with or qualify the Indenture under the Trust Indenture Act; or to
reflect a Subsidiary Guarantor ceasing to be liable on the Subsidiary
Guarantees because it is no longer a Subsidiary of the Company.

 

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.

 

 

B-6

 

11.           Trustee
Dealings With Company.

 

U.S. Bank National Association, 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 Securityholder
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 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-7

 

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-8

 

[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]

 

GUARANTEE

 

 

Beazer Commercial Holdings, LLC, Beazer Clarksburg, LLC, Beazer General
Services, Inc., Beazer Homes Corp., Beazer/Squires Realty, Inc., Beazer Homes
Sales, Inc., Beazer Homes Investments, LLC, Beazer Realty Corp., Beazer Homes
Holdings Corp., Beazer Homes Indiana Holdings Corp., Beazer Homes Texas Holdings,
Inc., Beazer Homes Texas, L.P., Beazer Homes Indiana, LLP, April Corporation,
Beazer SPE, LLC, Beazer Realty, Inc., Beazer Realty Services, LLC, Beazer
Realty Los Angeles, Inc., Beazer Realty Sacramento, Inc., Beazer Title Agency
of Arizona, LLC, Beazer Title Agency of Nevada, LLC, BH Building Products, LP,
BH Procurement Services, LLC, Homebuilders Title Services of Virginia, Inc.,
Homebuilders Title Services, Inc., Texas Lone Star Title, L.P., Beazer Allied
Companies Holdings, Inc., Paragon Title, LLC, Trinity Homes LLC, Beazer Homes Indiana, LLP, Beazer Homes Indiana
Holdings Corp., Beazer Realty Services, LLC, Beazer Realty Los Angeles, Inc.,
Beazer Realty Sacramento, Inc., BH Products, LP, BH Procurement Services, LLC, Beazer
General Services, Inc., Beazer Commercial Holdings, LLC, Beazer Clarksburg, LLC
and Arden Park Ventures, LLC (the “Subsidiary Guarantors”) have
unconditionally guaranteed, jointly and severally (such guarantee by each
Subsidiary Guarantor being referred to herein as the “Subsidiary 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 Subsidiary Guarantors shall have any
liability under the Subsidiary 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 Subsidiary Guarantees.

 

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

 

 

B-9

 

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

 

	
   

  	
  SUBSIDIARY GUARANTORS:

   

   

  APRIL CORPORATION

  BEAZER ALLIED COMPANIES HOLDINGS, INC.

  BEAZER GENERAL SERVICES, INC.

  BEAZER HOMES CORP.

  BEAZER HOMES HOLDINGS CORP.

  BEAZER HOMES INDIANA HOLDINGS CORP.

  BEAZER HOMES SALES, INC.

  BEAZER HOMES TEXAS HOLDINGS, INC.

  BEAZER REALTY CORP.

  BEAZER REALTY, INC.

  BEAZER REALTY LOS ANGELES, INC.

  BEAZER REALTY SACRAMENTO, INC.

  BEAZER/SQUIRES REALTY, INC.

  HOMEBUILDERS TITLE SERVICES OF
            VIRGINIA, INC.

  HOMEBUILDERS TITLE SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B-10

 

	
   

  	
  BEAZER HOMES INDIANA, LLP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER HOMES INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER HOMES TEXAS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER REALTY SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC,

  its Managing Member

  
	
   

  	
   

  	
   

  

 

 

B-11

 

	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER SPE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES HOLDINGS CORP., its Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BH BUILDING PRODUCTS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BH PROCUREMENT SERVICES, LLC, 

  its managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., 

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B-12

 

	
   

  	
  BH PROCUREMENT SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS, L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  PARAGON TITLE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS, LLC, 

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B-13

 

	
   

  	
  TEXAS LONE STAR TITLE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES TEXAS HOLDINGS, INC., its
  managing partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  TRINITY HOMES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES INVESTMENTS LLC, its manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  BEAZER COMMERCIAL HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP. its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B-14

 

	
   

  	
  BEAZER CLARKSBURG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  ARDEN PARK VENTURES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEAZER HOMES CORP.,

  its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

B-15

 

Exhibit C

Form of Certificate To Be

Delivered in Connection with

Transfers to Non-QIB Accredited Investors

 

[Date]

 

U.S. Bank National Association

U.S. Bank Corporate Trust Center

180 East 5th Street

Suite 200

St. Paul, MN  55101

 

Ladies and Gentlemen:

 

In connection with our proposed purchase of 8.125% Senior Notes due
2016  (the “Notes”) of Beazer
Homes USA, Inc., a Delaware corporation (the “Company”), we confirm
that:

 

1.             We have received a
copy of the Offering Memorandum (the “Offering Memorandum”), dated June
6, 2006, relating to the Notes 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 Notes is subject to certain restrictions and
conditions set forth in the Indenture relating to the Notes (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 Notes 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 Notes have not been registered under the Securities
Act, and that the Notes 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 Notes, 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 Notes (the form of which 

 

 

C-1

 

letter can be obtained from the Trustee),
(iv) outside the United States in accordance with Rule 904 of Regulation S
promulgated under the Securities 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 Notes from us a notice advising such purchaser that resales of the Notes
are restricted as stated herein.

 

4.             We understand that,
on any proposed resale of any Notes, 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 Notes
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 Notes, 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 Notes 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

 

Exhibit D

Form of Certificate To Be Delivered

in Connection with Transfers

Pursuant to Regulation S

 

[Date]

 

U.S. Bank National Association

U.S. Bank Corporate Trust Center

180 East 5th Street

Suite 200

St. Paul, MN  55101

 

Re:                               Beazer
Homes USA, Inc. (the “Company”)

8.125% Senior Notes due 2016 (the “Notes”)

 

 

Ladies and Gentlemen:

 

In connection with our proposed sale of
$[          ] aggregate
principal amount of the Notes, 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
Notes was not made to a person in the United States;

 

(2)           either (a) at the
time the buy offer 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(b) or Rule 904(b) 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 Notes.

 

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 

 

 

D-1

 

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.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  [Name
  of Transferee]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

D-2

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