Document:

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                                                                     EXHIBIT 4.2

                                TALX CORPORATION

                                       TO

                    THE BANK OF NEW YORK TRUST COMPANY, N. A.

                                   AS TRUSTEE

                                   ----------

                             SUBORDINATED INDENTURE

                              DATED AS OF [__], 20

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                                TABLE OF CONTENTS

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ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..............................................          1
         Section 1.1.               Definitions.................................................................          1
         Section 1.2.               Compliance certificates and opinions........................................         12
         Section 1.3.               Form of documents delivered to Trustee......................................         12
         Section 1.4.               Notices, etc., to Trustee and Company.......................................         13
         Section 1.5.               Notice to Holders; Waiver...................................................         13
         Section 1.6.               Conflict with Trust Indenture Act...........................................         14
         Section 1.7.               Effect of headings and Table of Contents....................................         14
         Section 1.8.               Successors and Assigns......................................................         15
         Section 1.9.               Separability clause.........................................................         15
         Section 1.10.              Benefits of Indenture.......................................................         15
         Section 1.11.              Governing law...............................................................         15
         Section 1.12.              Legal Holidays..............................................................         15
         Section 1.13.              No security interest created................................................         15
         Section 1.14.              Liability solely corporate..................................................         16

ARTICLE II. DEBT SECURITY FORMS.................................................................................         16
         Section 2.1.               Forms generally.............................................................         16
         Section 2.2.               Form of Trustee's Certificate of Authentication.............................         17
         Section 2.3.               Securities in Global Form...................................................         17

ARTICLE III. THE DEBT SECURITIES................................................................................         18
         Section 3.1.               Amount unlimited; issuable in series........................................         18
         Section 3.2.               Denominations...............................................................         23
         Section 3.3.               Execution, authentication; delivery and dating..............................         23
         Section 3.4.               Temporary Debt Securities; exchange of temporary Global Notes for
                                         definitive Bearer Securities; Global Notes representing
                                         Registered Securities..................................................         25
         Section 3.5.               Registration, transfer and exchange.........................................         31
         Section 3.6.               Mutilated, destroyed, lost and stolen Debt Securities.......................         33
         Section 3.7.               Payment of interest; interest rights preserved..............................         34
         Section 3.8.               Cancellation................................................................         36
         Section 3.9.               Computation of interest.....................................................         37
         Section 3.10.              Currency of payments in respect of Debt Securities..........................         37
         Section 3.11.              Judgments...................................................................         40
         Section 3.12.              Exchange upon default.......................................................         41

ARTICLE IV. SATISFACTION AND DISCHARGE..........................................................................         42
         Section 4.1.               Satisfaction and discharge of Indenture.....................................         42
         Section 4.2.               Application of trust money..................................................         43
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ARTICLE V. REMEDIES.............................................................................................         44
         Section 5.1.               Events of Default...........................................................         44
         Section 5.2.               Acceleration of maturity; rescission and annulment..........................         45
         Section 5.3.               Collection of indebtedness and suits for enforcement by Trustee.............         46
         Section 5.4.               Trustee may file proofs of claim............................................         47
         Section 5.5.               Trustee may enforce claims without possession of Debt Securities............         48
         Section 5.6.               Application of money collected..............................................         48
         Section 5.7.               Limitation on suits.........................................................         49
         Section 5.8.               Unconditional right of Holders to receive principal, premium and
                                         interest...............................................................         49
         Section 5.9.               Restoration of rights and remedies..........................................         50
         Section 5.10.              Rights and remedies cumulative..............................................         50
         Section 5.11.              Delay or omission not waiver................................................         50
         Section 5.12.              Control by Holders..........................................................         50
         Section 5.13.              Waiver of past defaults.....................................................         51
         Section 5.14.              Undertaking for costs.......................................................         51
         Section 5.15.              Waiver of stay or extension laws............................................         52

ARTICLE VI. THE TRUSTEE.........................................................................................         52
         Section 6.1.               Certain duties and responsibilities.........................................         52
         Section 6.2.               Notice of defaults..........................................................         53
         Section 6.3.               Certain rights of Trustee...................................................         54
         Section 6.4.               Not responsible for recitals or issuance of Debt Securities.................         55
         Section 6.5.               May hold Debt Securities....................................................         55
         Section 6.6.               Money held in trust.........................................................         56
         Section 6.7.               Compensation and reimbursement..............................................         56
         Section 6.8.               Disqualification; conflicting interests.....................................         57
         Section 6.9.               Corporate Trustee required; eligibility.....................................         57
         Section 6.10.              Resignation and removal; appointment of successor...........................         57
         Section 6.11.              Acceptance of appointment by successor......................................         58
         Section 6.12.              Merger, conversion, consolidation or succession to business.................         59
         Section 6.13.              Preferential collection of claims against Company...........................         60
         Section 6.14.              Appointment of Authenticating Agent.........................................         60

ARTICLE VII. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY..................................................         61
         Section 7.1.               Company to furnish Trustee names and addresses of Holders...................         61
         Section 7.2.               Preservation of information, communication to Holders.......................         62
         Section 7.3.               Reports by Trustee..........................................................         63
         Section 7.4.               Reports by Company..........................................................         63

ARTICLE VIII. CONCERNING THE HOLDERS............................................................................         64
         Section 8.1.               Acts of Holders.............................................................         64
         Section 8.2.               Proof of ownership; proof of execution of instruments by Holder.............         65
         Section 8.3.               Persons deemed owners.......................................................         66
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         Section 8.4.               Revocation of consents; future Holders bound................................         66

ARTICLE IX. HOLDERS' MEETINGS...................................................................................         66
         Section 9.1.               Purposes of meetings........................................................         66
         Section 9.2.               Call of meetings by Trustee.................................................         67
         Section 9.3.               Call of meetings by Company or Holders......................................         67
         Section 9.4.               Qualifications for voting...................................................         67
         Section 9.5.               Regulations.................................................................         68
         Section 9.6.               Voting......................................................................         68

ARTICLE X. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.................................................         69
         Section 10.1.              Company may consolidate, etc., only on certain terms........................         69
         Section 10.2.              Successor Corporation substituted...........................................         69

ARTICLE XI. SUPPLEMENTAL INDENTURES.............................................................................         70
         Section 11.1.              Supplemental indentures without consent of Holders..........................         70
         Section 11.2.              Supplemental indentures with consent of Holders.............................         71
         Section 11.3.              Execution of supplemental indentures........................................         73
         Section 11.4.              Effect of supplemental indentures...........................................         73
         Section 11.5.              Conformity with Trust Indenture Act.........................................         73
         Section 11.6.              Reference in Debt Securities to supplemental indentures.....................         73
         Section 11.7.              Notice of supplemental indenture............................................         73

ARTICLE XII. COVENANTS..........................................................................................         74
         Section 12.1.              Payment of principal, premium and interest..................................         74
         Section 12.2.              Officer's certificate as to default.........................................         74
         Section 12.3.              Maintenance of office or agency.............................................         74
         Section 12.4.              Money for Debt Securities; payments to be held in trust.....................         75
         Section 12.5.              Waiver of certain covenants.................................................         77

ARTICLE XIII. REDEMPTION OF DEBT SECURITIES.....................................................................         77
         Section 13.1.              Applicability of Article....................................................         77
         Section 13.2.              Election to redeem; notice to Trustee.......................................         77
         Section 13.3.              Selection by Trustee of Debt Securities to be redeemed......................         78
         Section 13.4.              Notice of redemption........................................................         79
         Section 13.5.              Deposit of redemption price.................................................         80
         Section 13.6.              Debt Securities payable on Redemption Date..................................         80
         Section 13.7.              Debt Securities redeemed in part............................................         81
         Section 13.8.              Conversion Arrangement in Call for Redemption...............................         81

ARTICLE XIV. SINKING FUNDS......................................................................................         82
         Section 14.1.              Applicability of Article....................................................         82
         Section 14.2.              Satisfaction of mandatory sinking fund payments with Debt Securities........         82
         Section 14.3.              Redemption of Debt Securities for sinking fund..............................         82
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ARTICLE XV. DEFEASANCE..........................................................................................         84
         Section 15.1.              Applicability of Article....................................................         84
         Section 15.2.              Defeasance upon deposit of moneys or U.S. Government Obligations............         84
         Section 15.3.              Deposited moneys and U.S. Government Obligations to be held in trust........         87
         Section 15.4.              Repayment to Company........................................................         87

ARTICLE XVI. CONVERSION.........................................................................................         87
         Section 16.1.              Applicability; conversion privilege.........................................         87
         Section 16.2.              Conversion procedure; Conversion Price; fractional shares...................         87
         Section 16.3.              Adjustment of Conversion Price for Common Stock.............................         89
         Section 16.4.              Consolidation or merger of the Company......................................         92
         Section 16.5.              Notice of adjustment........................................................         93
         Section 16.6.              Notice in certain events....................................................         93
         Section 16.7.              Company to reserve stock; registration; listing.............................         94
         Section 16.8.              Taxes on conversion.........................................................         94
         Section 16.9.              Conversion after record date................................................         95
         Section 16.10.             Conversion of Debt Securities into Preferred Shares or other
                                         Securities.............................................................         95
         Section 16.11.             Company determination final.................................................         95
         Section 16.12.             Trustee's disclaimer........................................................         95

ARTICLE XVII. SUBORDINATION.....................................................................................         96
         Section 17.1.              Agreement to subordinate....................................................         96
         Section 17.2.              Certain definitions.........................................................         96
         Section 17.3.              Liquidation; dissolution; bankruptcy, etc...................................         96
         Section 17.4.              Default on Senior Indebtedness..............................................         97
         Section 17.5.              When distribution must be paid over.........................................         97
         Section 17.6.              Notice by Company...........................................................         98
         Section 17.7.              Subrogation.................................................................         98
         Section 17.8.              Relative Rights.............................................................         98
         Section 17.9.              Subordination may not be impaired by Company................................         99
         Section 17.10.             Distribution................................................................         99
         Section 17.11.             Rights of Trustee and Paying Agent..........................................         99
         Section 17.12.             Authorization to effect subordination.......................................        100

ARTICLE XVIII. EXTENDED INTEREST PERIOD.........................................................................        100
         Section 18.1.              Extension of Interest Payment Period........................................        100
         Section 18.2.              Notice of extension.........................................................        100
         Section 18.3.              Limitation on transactions..................................................        101
         Section 18.4.              Applicability of Article....................................................        101
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      SUBORDINATED INDENTURE dated as of    [__], 20 , between TALX Corporation,
a Missouri corporation (hereinafter called the "Company"), having its principal
executive office at 1850 Borman Court, St. Louis, Missouri 64146 and The Bank of
New York Trust Company, N.A., a national banking association (hereinafter called
the "Trustee"), having its designated corporate trust office at 2 North LaSalle
Street, Suite 1020 Chicago, IL 60602.

                             RECITALS OF THE COMPANY

      The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its subordinated
debentures, notes, bonds or other evidences of indebtedness (herein generally
called the "Debt Securities"), to be issued in one or more series, as in this
Indenture provided.

      All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.

      NOW, THEREFORE, THIS INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of Debt Securities or of Debt
Securities of any series, as follows:

                                   ARTICLE I.

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

      Section 1.1. Definitions.

      For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

            (1) the terms defined in this Article have the meanings assigned to
      them in this Article, and include the plural as well as the singular;

            (2) all other terms used herein which are defined in the Trust
      Indenture Act, either directly or by reference therein, have the meanings
      assigned to them therein;

            (3) all accounting terms not otherwise defined herein have the
      meanings assigned to them in accordance with generally accepted accounting
      principles or as provided with respect to any series of Debt Securities,
      and, except as otherwise herein provided or as provided with respect to
      any series of Debt Securities, the term "generally accepted accounting
      principles" or "GAAP" with respect to any computation required or
      permitted hereunder with respect to any series of Debt Securities, shall
      mean such generally accepted accounting principles as are set forth in
      statements and pronouncements of the Financial Accounting Standards Board
      and in opinions of the Accounting Principles Board

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      of the American Institute of Certified Public Accountants, or in such
      other statements by such other entity as have been approved by a
      significant segment of the accounting profession or which have other
      substantial authoritative support in the United States and are applicable
      in the circumstances, in each case, as applied on a consistent basis,
      which are in effect as of the issuance date of such series of Debt
      Securities; and

            (4) the words "herein," "hereof" and "hereunder" and other words of
      similar import refer to this Indenture as a whole and not to any
      particular Article, Section or other subdivision.

Certain terms, used principally in Article III or Article VI, are defined in
those respective Articles.

      "Act" when used with respect to any Holder, has the meaning specified in
Section 8.1.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" as used with respect to any Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.

      "Authenticating Agent" has the meaning specified in Section 6.14.

      "Authorized Newspaper" means a newspaper in an official language of the
country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day in such city.

      "Bearer Security" means any Debt Security (with or without Coupons), in
the form established pursuant to Section 2.1, which is payable to bearer
(including any Global Note payable to bearer) and title to which passes by
delivery only, but does not include any Coupons.

      "Board of Directors" means either the board of directors of the Company,
or any committee of that board duly authorized to act hereunder or any director
or directors and/or officer or officers of the Company to whom that board or
committee shall have delegated its authority.

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      "Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee. Where any provision of this
Indenture refers to action to be taken pursuant to a Board Resolution (including
the establishment of any series of the Debt Securities and the forms and terms
thereof) such action may be taken by any committee, officer or employee of the
Company authorized to take such action by a Board Resolution.

      "Business Day" when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Debt Securities
means any day which is not a Saturday, a Sunday or a legal holiday or a day on
which banking institutions or trust companies in that Place of Payment or other
location, or, with respect to Debt Securities denominated in Foreign Currency,
in the capital city of the country of such Foreign Currency, or, with respect to
Debt Securities denominated in the euro, in Brussels, Belgium, are authorized or
obligated by law or regulation to close, except as otherwise specified pursuant
to Section 3.1.

      "Clearstream" means Clearstream Banking, S.A. (or any successor securities
clearing agency).

      "Closing Price" of the Common Stock for any Trading Day means (i) if the
Common Stock is then listed or admitted for trading on any national securities
exchange, the last sale price, or the closing bid price if no sale occurred, of
the Common Stock on such Trading Day on the principal securities exchange on
which the Common Stock is listed, (ii) if the Common Stock is not listed or
admitted for trading as described in clause (i), the last reported sale price of
the Common Stock on such Trading Day in the Nasdaq National Market, or any
similar system of automated dissemination of quotations of securities prices
then in common use, if so quoted, or (iii) if not listed or quoted as described
in clause (i) or (ii), the mean between the high bid and low asked quotations on
such Trading Day for the Common Stock as reported by the National Quotation
Bureau Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least five of the ten preceding
Trading Days. If none of the conditions set forth above is met, the last
reported sale price of the Common Stock on any Trading Day or the average of
such last reported sale prices for any period shall be the fair market value of
the Common Stock as determined by a member firm of the New York Stock Exchange
selected by the Company.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.

      "Common Stock" means the class of Common Stock, par value $.01 per share,
of the Company authorized at the date of this Indenture as originally signed, or
any other

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class of stock resulting from successive changes or reclassifications of such
Common Stock, and in any such case including any shares thereof authorized after
the date of this Indenture, and any other shares of stock of the Company which
do not have any priority in the payment of dividends or upon liquidation over
any other class of stock.

      "Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.

      "Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman of the Board,
a Vice Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, the Chief Operating Officer or a Vice President and by the Treasurer,
an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary
or an Assistant Secretary of the Company, and delivered to the Trustee.

      "Component Currency" has the meaning specified in Section 3.10(i).

      "Conversion Agent" means any Person authorized by the Company to receive
Debt Securities to be converted into Common Stock on behalf of the Company. The
Company initially authorizes the Trustee to act as Conversion Agent for the Debt
Securities on its behalf. The Company may at any time from time to time
authorize one or more Persons to act as Conversion Agent in addition to or in
place of the Trustee with respect to any series of Debt Securities issued under
this Indenture.

      "Conversion Date" has the meaning specified in Section 3.10(e).

      "Conversion Event" means the cessation of (i) a Foreign Currency to be
used both by the government of the country which issued such Currency and for
the settlement of transactions by public institutions of or within the
international banking community, or any Currency unit to be used for the
purposes for which it was established. Notwithstanding any term herein, or in
any supplement hereto, to the contrary, in no instance shall the Trustee be
under any duty or obligation to determine or monitor whether a Conversion Event
has occurred. Upon receipt by the Trustee of an Officers' Certificate of the
Company certifying to the effect that a Conversion Event has occurred, the
Trustee shall be entitled to rely exclusively thereon without independent
investigation on its part.

      "Conversion Price" means, with respect to any series of Debt Securities
which are convertible into Common Stock, the price per share of Common Stock at
which the Debt Securities of such series are so convertible pursuant to Section
3.1 with respect to such series, as the same may be adjusted from time to time
in accordance with Section 16.3.

      "Corporate Trust Office" means the designated corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this instrument is
located at 2 North LaSalle Street, Suite 1020 Chicago, IL 60602, Attention:
Corporate Trust Administration.

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      "Corporation" includes corporations, associations, national associations,
limited liability companies, limited partnerships, business trusts and other
legal entities.

      "Coupon" means any interest coupon appertaining to any Debt Security.

      "Coupon Security" means any Bearer Security authenticated and delivered
with one or more Coupons appertaining thereto.

      "Currency" means Dollars or Foreign Currency.

      "Currency Determination Agent" means the New York Clearing House bank, if
any, from time to time selected by the Company for purposes of Section 3.10;
provided that such agent shall accept such appointment in writing and the terms
of such appointment shall be acceptable to the Company and shall, in the opinion
of the Company and the Trustee at the time of such appointment, require such
agent to make the determinations required by this Indenture by a method
consistent with the method provided in this Indenture for the making of such
decision or determination.

      "Current Market Price" on any date shall mean the average of the daily
Closing Prices per share of Common Stock for any thirty (30) consecutive Trading
Days selected by the Company prior to the date in question, which thirty (30)
consecutive Trading Day period shall not commence more than forty-five (45)
Trading Days prior to the day in question; provided that with respect to Section
16.3(3), the "Current Market Price" of the Common Stock shall mean the average
of the daily Closing Prices per share of Common Stock for the ten (10)
consecutive Trading Days ending on the date of the distribution referred to in
Section 16.3(3) (or if such date shall not be a Trading Day, on the Trading Day
immediately preceding such date).

      "Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities (including any Global
Notes) authenticated and delivered under this Indenture.

      "Defaulted Interest" has the meaning specified in Section 3.7.

      "Discharged" has the meaning specified in Section 15.2.

      "Discount Security" means any Debt Security which is issued with "original
issue discount" within the meaning of Section 1273(a) of the Code (or any
successor provision) and the regulations thereunder.

      "Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time of payment is legal tender for the
payment of public and private debts.

      "Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 3.10(h).

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      "Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 3.10(g).

      "Election Date" has the meaning specified in Section 3.10(i).

      "Euroclear " means Euroclear Bank, S.A./N.V., as operator of the Euroclear
system (or any successor securities clearing agency).

      "Event of Default" has the meaning specified in Section 5.1.

      "Exchange Rate Officer's Certificate" means a facsimile transmission or a
certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar, Foreign Currency or Currency unit amounts of principal, premium, if any,
and any interest respectively (on an aggregate basis and on the basis of a Debt
Security having the lowest denomination principal amount determined in
accordance with Section 3.2 in the relevant Currency or Currency unit), payable
on the basis of such Market Exchange Rate sent (in the case of a facsimile
transmission) or signed (in the case of a certificate) by the Chief Financial
Officer, Treasurer or any Assistant Treasurer of the Company.

      "Extended Interest Period" has the meaning specified in Section 3.1.

      "Fixed Rate Security" means a Debt Security which provides for the payment
of interest at a fixed rate.

      "Floating Rate Security" means a Debt Security which provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index or any other index specified pursuant to Section 3.1.

      "Foreign Currency" means a currency issued by the government of any
country other than the United States or a composite currency or currency unit
the value of which is determined by reference to the values of the currencies of
any group of countries.

      "Global Note" means a Registered or Bearer Security evidencing all or part
of a series of Debt Securities, including, without limitation, any temporary or
Permanent Global Note.

      "Holder" means, with respect to a Registered Security, the Registered
Holder, and with respect to a Bearer Security or a Coupon, the bearer thereof.

      "Indenture" means this instrument as originally executed, or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and, unless the context otherwise requires, shall include the terms of a
particular series of Debt Securities as established pursuant to Section 3.1.

      "Interest" or "interest," when used with respect to a Discount Security
which by its terms bears interest only on a certain date, means interest payable
after such date, and,

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when used with respect to a Bearer Security, includes any additional amounts
payable on such Bearer Security, if so provided pursuant to Section 3.1.

      "Interest Payment Date" with respect to any Debt Security means the Stated
Maturity of an installment of interest on such Debt Security.

      "Market Exchange Rate" means, except as otherwise provided pursuant to
Section 3.1, or in any Debt Security, (i) for any conversion involving a
Currency unit on the one hand and Dollars or any Foreign Currency on the other,
the exchange rate between the relevant Currency unit and Dollars or such Foreign
Currency calculated by the method specified pursuant to Section 3.1 for the
securities of the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for any conversion of
one Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which, in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion is
being made from major banks located in either New York City, London or any other
principal market for Dollars or such purchased Foreign Currency. In the event of
the unavailability of any of the exchange rates provided for in the foregoing
clauses (i), (ii) and (iii) the Currency Determination Agent, if any, or if
there shall not be a Currency Determination Agent, then the Trustee, shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City, London or other
principal market for such Currency or Currency unit in question, or such other
quotations as the Currency Determination Agent or the Trustee, as the case may
be, shall deem appropriate. Unless otherwise specified by the Currency
Determination Agent, if any, or if there shall not be a Currency Determination
Agent, then by the Trustee, if there is more than one market for dealing in any
Currency or Currency unit by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such Currency or Currency unit
shall be that upon which a nonresident issuer of securities designated in such
Currency or Currency unit would purchase such Currency or Currency unit in order
to make payments in respect of such securities.

      "Maturity" when used with respect to any Debt Security means the date on
which the principal of such Debt Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption, repayment or repurchase at
the option of the Holder thereof or otherwise.

      "Notice of Default" has the meaning specified in Section 6.2.

      "Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman, the Chief Executive Officer, the President, the Chief
Financial Officer, any Senior Vice President or a Vice President, and by the
Treasurer, an Assistant

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Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.

      "Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Company (including an employee of the Company), which is
delivered to the Trustee, which opinion may be subject to standard
qualifications and exceptions.

      "Outstanding" when used with respect to Debt Securities, means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:

            (i) Debt Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;

            (ii) Debt Securities for whose redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated and held in trust
by the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Debt Securities and any Coupons thereto pertaining; provided,
however, that if such Debt Securities are to be redeemed prior to their Stated
Maturity, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made and
the date for such redemption has passed; and

            (iii) Debt Securities which have been paid pursuant to Section 3.6
or in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to this Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Debt Securities are held by a bona fide
purchaser in whose hands such Debt Securities are valid obligations of the
Company; provided, however, that in determining whether the Holders of the
requisite principal amount of Debt Securities Outstanding have performed any Act
hereunder, Debt Securities owned by the Company or any other obligor upon the
Debt Securities or any Affiliate of the Company or of such other obligor shall
be disregarded and deemed not to be Outstanding (provided, that in connection
with any offer by the Company or any obligor to purchase Debt Securities, Debt
Securities tendered by a Holder shall be Outstanding until the date of
purchase), except that, (i) in determining whether the Trustee shall be
protected in relying upon any such Act, only Debt Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded and
(ii) the foregoing shall not apply at any time when all of the Outstanding Debt
Securities are owned by the Company, the Trustee and/or any such Affiliate. Debt
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right to act with respect to such Debt Securities and that the pledgee
is not the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor. In determining whether the
Holders of the requisite principal amount of Outstanding Debt Securities have
performed any Act hereunder, the principal amount of a Discount Security that
shall be deemed to be Outstanding for such purpose shall be the amount of the
principal thereof that would be due and payable as of the date

                                       8

<PAGE>

of such determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 5.2 and the principal amount of a Debt Security denominated
in a Foreign Currency that shall be deemed to be Outstanding for such purpose
shall be the amount calculated pursuant to Section 3.10(k).

      "Overdue Rate" when used with respect to any series of the Debt
Securities, means the rate designated as such in that series of Debt Securities
or pursuant to the Board Resolution or the supplemental indenture, as the case
may be, relating to such series as contemplated by Section 3.1.

      "Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.

      "Permanent Global Note" shall have the meaning given such term in Section
3.4(b).

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

      "Place of Payment" when used with respect to the Debt Securities of any
series means the place or places where the principal of (and premium, if any)
and interest on the Debt Securities of that series are payable as specified
pursuant to Section 3.1.

      "Predecessor Security" of any particular Debt Security means every
previous Debt Security evidencing all or a portion of the same debt as that
evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 3.6 in
lieu of a mutilated, lost, destroyed or stolen Debt Security or a Debt Security
to which a mutilated, lost, destroyed or stolen Coupon appertains shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Debt Security or the Debt Security to which the mutilated, lost, destroyed or
stolen Coupon appertains, as the case may be.

      "Preferred Stock" means any shares of capital stock issued by the Company
that are entitled to a preference or priority over the Common Stock upon any
distribution of the Company's assets, whether by dividend or upon liquidation.

      "Redemption Date" means the date fixed for redemption of any Debt Security
pursuant to this Indenture which, unless otherwise specified pursuant to Section
3.1, shall be an Interest Payment Date only.

      "Redemption Price" means, in the case of a Discount Security, unless
otherwise specified pursuant to Section 3.1, the amount of the principal thereof
that would be due and payable as of the Redemption Date upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2, and in the case of
any other Debt Security, the principal

                                       9

<PAGE>

amount thereof, plus, in each case, premium, if any, and accrued and unpaid
interest, if any, to the Redemption Date.

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

      "Registered Security" means any Debt Security in the form established
pursuant to Section 2.1 which is registered as to principal and interest in the
Security Register.

      "Regular Record Date" for the interest payable on the Registered
Securities of any series on any Interest Payment Date means the date specified
for that purpose pursuant to Section 3.1 for such Interest Payment Date.

      "Responsible Officer" when used with respect to the Trustee means any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

      "Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5(a).

      "Senior Indebtedness" has the meaning specified in Section 17.2.

      "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.

      "Specified Amount" has the meaning specified in Section 3.10(i).

      "Stated Maturity" when used with respect to any Debt Security or any
installment of principal thereof or premium thereon or interest thereon means
the date specified in such Debt Security or the Coupon, if any, representing
such installment of interest, as the date on which the principal of such Debt
Security or such installment of principal, premium or interest is due and
payable.

      "Subsidiary" means, with respect to any specified Person, (i) any
corporation, association, or other business entity of which more than 50% of the
total voting power of shares of capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).

                                       10

<PAGE>

      "Temporary Global Note" or "temporary Global Note" shall have the meaning
given such term in Section 3.4(b).

      "Trading Day" means a day during which trading in securities generally
occurs in the Nasdaq National Market or, if the applicable security is not
quoted in the Nasdaq National Market, on the principal other national or
regional securities exchange or market on which the applicable security is then
listed or traded.

      "Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Debt
Securities of any series shall mean the Trustee with respect to Debt Securities
of such series.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
and as in force at the date as of which this instrument was executed, except as
provided in Section 11.5.

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

      "U.S. Depositary" means a clearing agency registered under the Securities
Exchange Act of 1934, as amended, or any successor thereto, which shall in
either case be designated as such by the Company pursuant to Section 3.1 until a
successor U.S. Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "U.S. Depositary" shall mean or
include each Person who is then a U.S. Depositary hereunder, and if at any time
there is more than one such Person, "U.S. Depositary" as used with respect to
the Debt Securities of any series shall mean the U.S. Depositary with respect to
the Debt Securities of that series.

      "U.S. Government Obligations" has the meaning specified in Section 15.2.

      "U.S. Person" means a citizen or resident of the United States, a
corporation, partnership, limited liability company or other entity created or
organized in or under the laws of the United States, or an estate or trust the
income of which is subject to United States Federal income taxation regardless
of its source.

      "Valuation Date" has the meaning specified in Section 3.10(d).

      "Vice President" includes with respect to the Company and the Trustee, any
Vice President of the Company or the Trustee, as the case may be, whether or not
designated by a number or word or words added before or after the title "Vice
President."

                                       11

<PAGE>

      Section 1.2. Compliance certificates and opinions.

      Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than certificates provided
pursuant to Section 12.2) shall include:

            (1) a statement that each individual signing such certificate or
      opinion has read such covenant or condition and the definitions herein
      relating thereto;

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

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

            (4) a statement as to whether, in the opinion of each such
      individual, such condition or covenant has been complied with.

      Every such certificate or opinion provided under this Indenture shall be
without personal recourse to the individual executing the same and may include
an express statement to such effect.

      Section 1.3. Form of documents delivered to Trustee.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

      Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer's certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it

                                       12

<PAGE>

relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument. All applications, requests, consents, certificates,
statements, opinions or other instruments given under this Indenture shall be
without personal recourse to any individual giving the same and may include an
express statement to such effect.

      Section 1.4. Notices, etc., to Trustee and Company.

      Any Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:

            (1) the Trustee by any Holder or by the Company shall be sufficient
      for every purpose hereunder (unless otherwise herein expressly provided)
      if made, given, furnished or filed in writing to or with the Trustee at
      its Corporate Trust Office, Attention: Corporate Trust Administration; or

            (2) the Company by the Trustee or by any Holder shall be sufficient
      for every purpose hereunder (unless otherwise herein expressly provided)
      if in writing and mailed, first-class postage prepaid or airmail postage
      prepaid if sent from outside the United States, to the Company addressed
      to it at the address of its principal office specified in the first
      paragraph of this instrument, to the attention of its Treasurer or Chief
      Financial Officer, or at any other address previously furnished in writing
      to the Trustee by the Company.

      Any such Act or other document shall be in the English language, except
that any published notice may be in an official language of the country of
publication.

      Section 1.5. Notice to Holders; Waiver.

      When this Indenture provides for notice to Holders of any event, (1) such
notice shall be sufficiently given to Registered Holders (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to such Registered Holders as their names and addresses appear in the
Security Register, within the time prescribed, and (2) such notice shall be
sufficiently given to Holders of Bearer Securities or Coupons (unless otherwise
herein expressly provided) if published at least twice in an Authorized
Newspaper or Newspapers in The City of New York and, if Debt Securities of such
series are then listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, in a
daily newspaper in London or Luxembourg or in such other city or cities
specified pursuant to Section 3.1 or in any Debt Security on Business Days, the
first such publication to be not earlier than the earliest date and the second
such publication to be not later than prior to the latest date

                                       13

<PAGE>

prescribed for the giving of such notice; provided, however, that, in any case,
any notice to Holders of Floating Rate Securities regarding the determination of
a periodic rate of interest, if such notice is required pursuant to Section 3.1,
shall be sufficiently given if given in the manner specified pursuant to Section
3.1.

      In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice to Holders of Registered
Securities by mail, such notification as the Company shall reasonably determine
be given with the approval of the Trustee shall constitute sufficient notice for
every purpose hereunder.

      In the event of suspension of publication of any Authorized Newspapers or
by reason of any other cause it shall be impracticable to give notice to Holders
of Bearer Securities by publication, such notification as shall be given with
the approval of the Trustee shall constitute sufficient notice for every purpose
hereunder.

      Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance on such waiver. In any case where notice to Holders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given. In any case
where notice to Holders is given by publication, any defect in any notice so
published as to any particular Holder shall not affect the sufficiency of such
notice with respect to other Holders, and any notice which is published in the
manner herein provided shall be conclusively presumed to have been duly given.

      Section 1.6. Conflict with Trust Indenture Act.

      This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act. If any provision hereof limits, qualifies or conflicts
with the duties imposed on any person by the provisions of Sections 310 to 317,
inclusive, of the Trust Indenture Act, the duties imposed by the Trust Indenture
Act shall control. If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act, which is automatically deemed to be
included in this Indenture by any of the provisions of the Trust Indenture Act,
such provision of the Trust Indenture Act shall control. If a provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act, which
may be modified or excluded, the former provision shall be deemed to apply to
this Indenture as so modified or excluded.

      Section 1.7. Effect of headings and Table of Contents.

      The Article and Section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.

                                       14

<PAGE>

      Section 1.8. Successors and Assigns.

      The Company shall have the right at all times to assign any of its
respective rights or obligations under the Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company shall remain liable for such obligations. All covenants
and agreements in this Indenture by the parties hereto shall bind their
respective successors and assigns and inure to the benefit of their permitted
successors and assigns, whether so expressed or not.

      Section 1.9. Separability clause.

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

      Section 1.10. Benefits of Indenture.

      Nothing in this Indenture or in the Debt Securities, express or implied,
shall give to any Person, other than the parties hereto, any Security Registrar,
any Paying Agent and their successors hereunder, and the Holders (and with
respect to the provisions of Article XVII, the holders of Senior Indebtedness),
any benefit or any legal or equitable right, remedy or claim under this
Indenture.

      Section 1.11. Governing law.

      This Indenture, the Debt Securities and the Coupons shall be governed by
and construed in accordance with the internal laws of the State of New York.

      Section 1.12. Legal Holidays.

      Unless otherwise specified pursuant to Section 3.1 or in any Debt
Security, in any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Debt Security of any series shall not be a Business Day at any
Place of Payment for the Debt Securities of that series, then (notwithstanding
any other provision of this Indenture or of the Debt Securities or Coupons)
payment of principal (and premium, if any) or interest need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date, Redemption Date or at the Stated Maturity, and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to such Business Day if such payment is made or duly provided for on such
Business Day.

      Section 1.13. No security interest created.

      Nothing in this Indenture or in the Debt Securities or Coupons, express or
implied, shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted and in
effect in any jurisdiction where property of the Company or its Subsidiaries is
or may be located.

                                       15

<PAGE>

      Section 1.14. Liability solely corporate.

      No recourse shall be had for the payment of the principal of (or premium,
if any) or the interest on any Debt Securities or Coupons, or any part thereof,
or of the indebtedness represented thereby, or upon any obligation, covenant or
agreement of this Indenture, against any incorporator, or against any
shareholder, officer or director, as such, past, present or future, of the
Company (or any incorporator, shareholder, officer or director of any
predecessor or successor corporation), either directly or through the Company
(or any such predecessor or successor corporation), whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that this
Indenture and all the Debt Securities and Coupons are solely corporate
obligations, and that no personal liability whatsoever shall attach to, or be
incurred by, any such incorporator, shareholder, officer or director, past,
present or future, of the Company (or any incorporator, shareholder, officer or
director of any such predecessor or successor corporation), either directly or
indirectly through the Company or any such predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants, promises or agreements contained in this Indenture
or in any of the Debt Securities or Coupons or to be implied herefrom or
therefrom; and that any such personal liability is hereby expressly waived and
released as a condition of, and as part of the consideration for, the execution
of this Indenture and the issue of Debt Securities; provided, however, that
nothing herein or in the Debt Securities or Coupons contained shall be taken to
prevent recourse to and the enforcement of the liability, if any, of any
shareholder or subscriber to capital stock upon or in respect of the shares of
capital stock not fully paid.

                                   ARTICLE II.

                               DEBT SECURITY FORMS

      Section 2.1. Forms generally.

      The Debt Securities and the Coupons, if any, of each series shall be
substantially in one of the forms (including global form) established in or
pursuant to a Board Resolution or one or more indentures supplemental hereto,
and shall have such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any securities exchange, or to conform
to usage, all as determined by the officers executing such Debt Securities and
Coupons as conclusively evidenced by their execution of such Debt Securities and
Coupons. If the form of Debt Securities or Coupons (or any Global Note) of a
series is established in or pursuant to a Board Resolution, a copy of such Board
Resolution shall be delivered to the Trustee, together with an Officers'
Certificate setting forth the form of such Debt Securities, Coupons or Global
Notes, at or prior to the delivery of the Company Order contemplated by Section
3.3 for the authentication and delivery of such Debt Securities (or any such
Global Note) or Coupons.

                                       16

<PAGE>

      Unless otherwise specified as contemplated by Section 3.1, Debt Securities
in bearer form (other than in global form) shall have Coupons attached.

      The definitive Debt Securities and Coupons, if any, of each series shall
be printed, lithographed or engraved or produced by any combination of these
methods on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Debt Securities and Coupons, as
conclusively evidenced by their execution of such Debt Securities and Coupons.

      Section 2.2. Form of Trustee's Certificate of Authentication.

      The form of the Trustee's certificate of authentication to be borne by the
Debt Securities shall be substantially as follows:

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

      This is one of the series of Debt Securities referred to in the within
mentioned Indenture.

                                     _______________________________, As Trustee
                                     _______________________________

                                     By: ___________________________
                                            Authorized Signatory

      Section 2.3. Securities in Global Form.

      If any Debt Security of a series is issuable in global form (a "Global
Note"), such Global Note may provide that it shall represent the aggregate
amount of Outstanding Debt Securities from time to time endorsed thereon and may
also provide that the aggregate amount of Outstanding Debt Securities
represented thereby may from time to time be reduced or increased to reflect
exchanges. Any endorsement of a Global Note to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders of
Outstanding Debt Securities represented thereby shall be made by the Trustee and
in such manner as shall be specified in such Global Note. Any instructions by
the Company with respect to endorsement or delivery or redelivery of a Global
Note, after its initial issuance, shall be in writing but need not comply with
Section 1.2 and need not be accompanied by an Opinion of Counsel.

      Global Notes may be issued in either registered or bearer form and in
either temporary or permanent form. Permanent Global Notes will be issued in
definitive form.

                                       17

<PAGE>

                                  ARTICLE III.

                               THE DEBT SECURITIES

      Section 3.1. Amount unlimited; issuable in series.

      The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.

      The Debt Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and (subject to Section 3.3)
set forth or determined in the manner provided in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Debt Securities of any series, to the extent applicable:

            (1) the title of the Debt Securities of the series (which shall
      distinguish the Debt Securities of such series from all other series of
      Debt Securities);

            (2) the aggregate principal amount of such series of Debt Securities
      and any limit, on the aggregate principal amount of the Debt Securities of
      the series which may be authenticated and delivered under this Indenture
      (except for Debt Securities authenticated and delivered upon registration
      of, transfer of, or in exchange for, or in lieu of, other Debt Securities
      of such series pursuant to Sections 3.4, 3.5, 3.6, 11.6 or 13.7);

            (3) the percentage of the principal amount at which the Debt
      Securities of such series will be issued and, if other than the principal
      amount thereof, the portion of the principal amount thereof payable upon
      declaration of acceleration of the maturity or upon redemption thereof or
      the method by which such portion shall be determined;

            (4) the date or dates on which or periods during which the Debt
      Securities of the series may be issued, and the date or dates or the
      method by which such date or dates will be determined, and on which the
      principal, or any installments of principal of (and premium, if any, on)
      the Debt Securities of such series are or may be payable (which, if so
      provided in or pursuant to such Board Resolution or supplemental
      indenture, may be determined by the Company from time to time as set forth
      in the Debt Securities of the series issued from time to time);

            (5) the rate or rates (which may be variable or fixed) at which the
      Debt Securities of the series shall bear interest, if any, or the method
      by which such rate or rates shall be determined, the date or dates from
      which such interest, if any, shall accrue or the method by which such date
      or dates shall be determined (which, in either case or both, if so
      provided in or pursuant to such Board Resolution or supplemental
      indenture, may be determined by the Company from time to time and set
      forth in the Debt Securities of the series issued from time to time); and
      the Interest Payment Dates on which such interest shall be payable (or the
      method of determination thereof), if any, the Regular Record Date with

                                       18

<PAGE>

      respect to any Interest Payment Date, the Person to whom any interest on
      any Registered Security of the series shall be payable, if other than the
      Person in whose name that Debt Security (or one or more Predecessor Debt
      Securities) is registered at the close of business on the Regular Record
      Date for such interest, and the manner in which, or the Person to whom,
      any interest on any Bearer Security of the series shall be payable, if
      otherwise than upon presentation and surrender of the Coupons appertaining
      thereto as they severally mature;

            (6) the place or places, if any, in addition to or instead of the
      Corporate Trust Office of the Trustee (in the case of Registered
      Securities) where the principal of (and premium, if any) and interest on
      Debt Securities of the series shall be payable; the extent to which, or
      the manner in which, any interest payable on any Global Note on an
      Interest Payment Date will be paid, if other than in the manner provided
      in Section 3.7; the extent, if any, to which the provisions of the last
      sentence of Section 12.1 shall apply to the Debt Securities of the series;
      and the manner in which any principal of, or premium, if any, on, any
      Global Note will be paid, if other than as set forth elsewhere herein and
      whether any Global Note will require any notation to evidence payment of
      principal or interest;

            (7) the obligation, if any, of the Company to redeem, repay,
      purchase or offer to purchase Debt Securities of the series pursuant to
      any mandatory redemption, sinking fund or analogous provisions or upon
      other conditions or at the option of the Holder thereof and the period or
      periods within which or the dates on which, the prices at which and the
      terms and conditions upon which the Debt Securities of the series shall be
      redeemed, repaid, purchased or offered to be purchased, in whole or in
      part, pursuant to such obligation;

            (8) the right, if any, of the Company to redeem the Debt Securities
      of such series at its option and the period or periods within which, or
      the date or dates on which, the price or prices at which, and the terms
      and conditions upon which such Debt Securities may be redeemed, if any, in
      whole or in part, at the option of the Company or otherwise;

            (9) if the coin or Currency in which the Debt Securities shall be
      issuable is in Dollars, the denominations of such Debt Securities if other
      than denominations of $1,000 and any integral multiple thereof (except as
      provided in Section 3.4);

            (10) whether the Debt Securities of the series are to be issued as
      Discount Securities and the amount of discount with which such Debt
      Securities may be issued and, if other than the principal amount thereof,
      the portion of the principal amount of Debt Securities of the series which
      shall be payable upon declaration of acceleration of the Maturity thereof
      pursuant to Section 5.2;

            (11) the extent to which provisions, if any, for the defeasance or
      discharge of the Debt Securities of such series or of certain of the
      Company's obligations with respect to such Debt Securities set forth
      herein shall be

                                       19

<PAGE>

      inapplicable and any provisions in modification of, in addition to or in
      lieu of such provisions;

            (12) whether Debt Securities of the series are to be issued as
      Registered Securities or Bearer Securities or both, and, if Bearer
      Securities are issued, whether Coupons will be attached thereto, whether
      such Bearer Securities of the series may be exchanged for Registered
      Securities of the series, as provided in Section 3.5(b) or otherwise and
      the circumstances under which and the place or places at which any such
      exchanges, if permitted, may be made;

            (13) whether provisions for payment of additional amounts or tax
      redemptions shall apply and, if such provisions shall apply, such
      provisions; and, if Bearer Securities of the series are to be issued,
      whether a procedure other than that set forth in Section 3.4(b) shall
      apply and, if so, such other procedure, and if the procedure set forth in
      Section 3.4(b) shall apply, the forms of certifications to be delivered
      under such procedure;

            (14) if other than Dollars, the Foreign Currency or Currencies in
      which Debt Securities of the series shall be denominated or in which
      payment of the principal of (and premium, if any) and interest on the Debt
      Securities of the series may be made, and the particular provisions
      applicable thereto and, if applicable, the amount of Debt Securities of
      the series which entitles the Holder of a Debt Security of the series or
      its proxy to one vote for purposes of Section 9.5;

            (15) if the principal of (and premium, if any) or interest on Debt
      Securities of the series are to be payable, at the election of the Company
      or a Holder thereof, in a Currency other than that in which the Debt
      Securities are denominated or payable without such election, in accordance
      with procedures and in addition to or in lieu of the provisions of Section
      3.10, the period or periods within which and the terms and conditions upon
      which, such election may be made and the time and the manner of
      determining the exchange rate or rates between the Currency or Currencies
      in which the Debt Securities are denominated or payable without such
      election and the Currency or Currencies in which the Debt Securities are
      to be paid if such election is made;

            (16) the date as of which any Debt Securities of the series shall be
      dated, if other than as set forth in Section 3.3;

            (17) if the amount of payments of principal of (and premium, if any)
      or interest on the Debt Securities of the series may be determined with
      reference to an index, including, but not limited to, an index based on a
      Currency or Currencies other than that in which the Debt Securities are
      denominated or payable, or any other type of index, the manner in which
      such amounts shall be determined;

            (18) if the Debt Securities of the series are denominated or payable
      in a Foreign Currency, any other terms concerning the payment of principal
      of (and

                                       20

<PAGE>

      premium, if any) or any interest on such Debt Securities (including the
      Currency or Currencies of payment thereof);

            (19) the designation of the original Currency Determination Agent,
      if any;

            (20) the applicable Overdue Rate, if any;

            (21) if the Debt Securities of the series do not bear interest, the
      applicable dates for purposes of Section 7.1;

            (22) any addition to, or modification or deletion of, any term or
      condition relating to subordination, Events of Default or covenants
      provided for with respect to Debt Securities of the series, including,
      without limitation, Article XVII;

            (23) if Bearer Securities of the series are to be issued, (x)
      whether interest in respect of any portion of a temporary Debt Security in
      global form (representing all of the Outstanding Bearer Securities of the
      series) payable in respect of any Interest Payment Date prior to the
      exchange of such temporary Debt Security for definitive Debt Securities of
      the series shall be paid to any clearing organization with respect to the
      portion of such temporary Debt Security held for its account and, in such
      event, the terms and conditions (including any certification requirements)
      upon which any such interest payment received by a clearing organization
      will be credited to the Persons entitled to interest payable on such
      Interest Payment Date, (y) the terms, if any, upon which interests in such
      temporary Debt Security in global form may be exchanged for interests in a
      Permanent Global Note or for definitive Debt Securities of the series and
      the terms upon which interests in a Permanent Global Note, if any, may be
      exchanged for definitive Debt Securities of the series and (z) the cities
      and the Authorized Newspapers designated for the purposes of giving
      notices to Holders;

            (24) whether the Debt Securities of the series shall be issued in
      whole or in part in the form of one or more Global Notes and, in such
      case, the U.S. Depositary or any Common Depositary for such Global Note or
      Notes; and if the Debt Securities of the series are issuable only as
      Registered Securities, the manner in which and the circumstances under
      which Global Notes representing Debt Securities of the series may be
      exchanged for Registered Securities in definitive form, if other than, or
      in addition to, the manner and circumstances specified in Section 3.4(c);

            (25) the designation, if any, of any depositaries, trustees (other
      than the applicable Trustee), Paying Agents, Authenticating Agents,
      Security Registrars (other than the Trustee) or other agents with respect
      to the Debt Securities of such series;

            (26) if the Debt Securities of such series will be issuable in
      definitive form only upon receipt of certain certificates or other
      documents or upon

                                       21

<PAGE>

      satisfaction of certain conditions, the form and terms of such
      certificates, documents or conditions;

            (27) whether the Debt Securities of such series will be convertible
      into shares of Common Stock or into other securities or other property
      (whether or not issued by, or the obligation of the Company) and, if so,
      the terms and conditions, which may be in addition to or in lieu of the
      provisions contained in this Indenture, upon which such Debt Securities
      will be so convertible, including the conversion price and the conversion
      period, including any adjustments thereto;

            (28) the portion of the principal amount of the Debt Securities of
      such series that will be payable upon declaration of acceleration of the
      maturity thereof, if other than the principal amount thereof;

            (29) if other than as provided in this Indenture, the nature,
      content and date for reports by the Company to the holders of the Debt
      Securities of such series;

            (30) the terms, if any, of any repurchase or remarketing rights;

            (31) provisions relating to the subordination of the Debt
      Securities, if other than as set forth in Article XVII;

            (32) whether Article XVIII will apply to the Debt Securities of the
      series, and any addition to, or modification or deletion of, Article
      XVIII; and

            (33) any other terms of the series (which terms shall not be
      inconsistent with the provisions of this Indenture).

      All Debt Securities of any one series shall be substantially identical
except as to denomination, rate of interest, Stated Maturity and the date from
which interest, if any, shall accrue, which, as set forth above, may be
determined by the Company from time to time as to Debt Securities of a series if
so provided in or established pursuant to the authority granted in or pursuant
to a Board Resolution or in any such indenture supplemental hereto, and except
as may otherwise be provided in or pursuant to such Board Resolution and
(subject to Section 3.3) set forth in such Officers' Certificate, or in any such
indenture supplemental hereto. All Debt Securities of any one series need not be
issued at the same time, and unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuance of additional Debt
Securities of such series or to establish additional terms of such series of
Debt Securities, which additional terms shall only be applicable to unissued or
additional Debt Securities of such series.

      If any of the terms of a series of Debt Securities is established in or
pursuant to a Board Resolution, a copy of such Board Resolution shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

                                       22

<PAGE>

      Section 3.2. Denominations.

      In the absence of any specification pursuant to Section 3.1 with respect
to the Debt Securities of any series, the Debt Securities of such series shall
be issuable only as Registered Securities in denominations of $1,000 and any
integral multiple thereof and shall be payable only in Dollars.

      Section 3.3. Execution, authentication; delivery and datinG.

      The Debt Securities and the Coupons, if any, of any series shall be
executed on behalf of the Company by its Chairman of the Board, a Vice Chairman,
Chief Executive Officer, President, one of its Vice Presidents or Treasurer. The
signature of any of these officers may be manual or facsimile.

      Debt Securities and Coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debt
Securities and Coupons or did not hold such offices at the date of such Debt
Securities and Coupons.

      At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Debt Securities, with appropriate Coupons, if
any, of any series, executed by the Company, to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such Debt
Securities and Coupons and the Trustee in accordance with the Company Order
shall authenticate and deliver such Debt Securities and Coupons; provided,
however, that, in connection with its sale during the "restricted period" (as
defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury
Regulations), no Bearer Security shall be mailed or otherwise delivered to any
location in the United States; and provided, further, that a Bearer Security
(other than a temporary Global Note in bearer form) may be delivered outside the
United States in connection with its original issuance only if the Person
entitled to receive such Bearer Security shall have furnished to Euroclear or to
Clearstream a certificate substantially in the form set forth in Exhibit A to
this Indenture. If all the Debt Securities of any one series are not to be
issued at one time and if a Board Resolution or the Officers' Certificate or
other document pursuant to a Board Resolution or supplemental indenture relating
to such series shall so permit, such Company Order may set forth procedures
acceptable to the Trustee for the issuance of such Debt Securities and for the
determination of the terms thereof, such as interest rate, Stated Maturity, date
of issuance and date from which interest, if any, shall accrue. If any Debt
Security shall be represented by a Permanent Global Note, then, for purposes of
this Section 3.3 and Section 3.4, the notation of a beneficial owner's interest
therein upon original issuance of such Debt Security or upon exchange of a
portion of a temporary Global Note shall be deemed to be delivery in connection
with the original issuance of such beneficial owner's interest in such Permanent
Global Note. Except as permitted by Section 3.6 or 3.7, the Trustee shall not
authenticate and deliver any Bearer Security unless all Coupons for interest
then matured have been detached and canceled.

      The Trustee shall receive, and (subject to Section 6.1) shall be fully
protected in conclusively relying upon, prior to the authentication and delivery
of the Debt Securities and

                                       23

<PAGE>

Coupons of such series, (i) the supplemental indenture or the Board Resolution
by or pursuant to which the form and terms of such Debt Securities and Coupons
have been approved and (ii) an Opinion of Counsel substantially to the effect
that:

            (1) the Company Order to the Trustee in connection with the
      authentication and delivery of such Debt Securities and Coupons conforms
      to the requirements of this Indenture and constitutes sufficient authority
      hereunder for the Trustee to authenticate and deliver such Debt Securities
      and Coupons;

            (2) the forms and terms (or if applicable, the manner of determining
      the terms) of such Debt Securities and Coupons are consistent with the
      provisions of this Indenture;

            (3) in the event that the forms or terms of such Debt Securities and
      Coupons have been established in a supplemental indenture, the execution
      and delivery of such supplemental indenture has been duly authorized by
      all necessary corporate action of the Company, such supplemental indenture
      has been duly executed and delivered by the Company and, assuming due
      authorization, execution and delivery by the Trustee, is a valid and
      binding obligation enforceable against the Company in accordance with its
      terms, subject to applicable bankruptcy, insolvency and similar laws
      affecting creditors' rights generally and subject, as to enforceability,
      to general principles of equity (regardless of whether enforcement is
      sought in a proceeding in equity or at law) and subject to such other
      exceptions as counsel shall request and as to which the Trustee shall not
      reasonably object;

            (4) the execution and delivery of such Debt Securities and Coupons
      have been duly authorized by all necessary corporate action of the Company
      and such Debt Securities and Coupons (if to be issued at the time of
      delivery of such Company Order) have been duly executed and delivered by
      the Company and, assuming due authentication by the Trustee and execution
      and delivery by the Company, are valid and binding obligations enforceable
      against the Company in accordance with their terms, entitled to the
      benefit of the Indenture, subject to applicable bankruptcy, insolvency and
      similar laws affecting creditors' rights generally and subject, as to
      enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding in equity or at law) and subject to
      such other exceptions as counsel shall request and as to which the Trustee
      shall not reasonably object; and

            (5) the amount of Debt Securities Outstanding of such series,
      together with the amount of such Debt Securities, does not exceed any
      limit established under the terms of this Indenture on the amount of Debt
      Securities of such series that may be authenticated and delivered.

      Notwithstanding the provisions of Section 3.1 and of the preceding
paragraphs, if all Debt Securities of a series are not to be originally issued
at one time, it shall not be necessary to deliver the Board Resolution otherwise
required pursuant to Section 3.1 or the Company Order,

                                       24

<PAGE>

the Officers' Certificate and Opinion of Counsel otherwise required pursuant to
the preceding paragraphs or Sections 1.2 and 2.1 at or prior to the
authentication of each Debt Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Debt Security of such series to be issued.

      With respect to Debt Securities of a series that are not to be originally
issued at one time, the Trustee may rely, as to the authorization by the Company
of any of such Debt Securities, the forms and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of Counsel
and the other documents delivered pursuant to Sections 2.1 and 3.1 and this
Section, as applicable, in connection with the first authentication of Debt
Securities of such series.

      The Trustee shall not be required to authenticate such Debt Securities and
Coupons if the issuance of such Debt Securities and Coupons pursuant to this
Indenture will affect the Trustee's own rights, duties or immunities under the
Debt Securities and this Indenture in a manner which is not reasonably
acceptable to the Trustee.

      Each Registered Security shall be dated the date of its authentication.
Each Bearer Security (including any temporary or permanent or other definitive
Bearer Security in global form) shall be dated as of the date of original
issuance of the first Debt Security of such series to be issued, except as
otherwise provided pursuant to Section 3.1 with respect to the Bearer Securities
of any series.

      No Debt Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Debt
Security a certificate of authentication substantially in one of the forms
provided for herein duly executed by the Trustee or by an Authenticating Agent,
and such certificate upon any Debt Security shall be conclusive evidence, and
the only evidence, that such Debt Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Debt Security shall have been duly
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Debt Security to the Trustee for cancellation
as provided in Section 3.8 together with a written statement (which need not
comply with Section 1.2) stating that such Debt Security has never been issued
and sold by the Company, for all purposes of this Indenture such Debt Security
shall be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.

      Section 3.4. Temporary Debt Securities; exchange of temporary Global Notes
for definitive Bearer Securities; Global Notes representing Registered
Securities.

      (a) Pending the preparation of definitive Registered Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Registered Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination for Registered Securities of such series, substantially of the
tenor of the definitive Registered Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Registered Securities may determine,
as conclusively evidenced by their

                                       25

<PAGE>

execution of such Registered Securities. Every such temporary Registered
Security shall be executed by the Company and shall be authenticated and
delivered by the Trustee upon the same conditions and in substantially the same
manner, and with the same effect, as the definitive Registered Securities in
lieu of which they are issued. In the case of any series issuable as Bearer
Securities, such temporary Debt Securities may be in global form, representing
such of the Outstanding Debt Securities of such series as shall be specified
therein.

      Except in the case of temporary Debt Securities in global form (which
shall be exchanged in accordance with the provisions of the following
paragraphs), if temporary Debt Securities of any series are issued, the Company
will cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series, of a like Stated Maturity and with
like terms and provisions, upon surrender of the temporary Debt Securities of
such series at the office or agency of the Company in a Place of Payment for
such series, without charge to the Holder, except as provided in Section 3.5 in
connection with a transfer. Upon surrender for cancellation of any one or more
temporary Debt Securities of any series (accompanied by any unmatured Coupons),
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debt Securities of the
same series of authorized denominations and of a like Stated Maturity and like
terms and provisions; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and
provided, further, that a definitive Bearer Security (including a permanent
Bearer Security in global form) shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth in Section 3.3
and this Section 3.4. Until so exchanged, the temporary Registered Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Registered Securities of such series.

      (b) Unless otherwise specified pursuant to Section 3.1, all Bearer
Securities of a series shall be initially issued in the form of a single
temporary Bearer Security in global form (a "temporary Global Note"). The
Company shall execute, and upon Company Order the Trustee shall authenticate,
any temporary Global Note and any permanent Bearer Security in global form (as
described below, a "Permanent Global Note") upon the same conditions and in
substantially the same manner, and with the same effect, as definitive Bearer
Securities, and the temporary or Permanent Global Note, as the case may be,
shall, unless otherwise specified therein, be delivered by the Trustee to the
London office of a depositary or common depositary (the "Common Depositary"),
for the benefit of Euroclear or Clearstream, as the case may be, for credit to
the account of the Company (in the case of sales of Bearer Securities by the
Company directly to investors) or the managing underwriter (in the case of sales
of Bearer Securities by the Company to underwriters) or such other accounts as
the Company or the managing underwriter, respectively, may direct.

      On or after the date specified in or determined pursuant to the terms of
any temporary Global Note which (subject to any applicable laws and regulations)
shall be at least 40 days after the issue date of a temporary Global Note (the
"Exchange Date"), the Debt Securities represented by such temporary Global Note
may be exchanged for definitive Debt Securities (subject to the second
succeeding paragraph) or Debt Securities to be represented thereafter by one or
more Permanent Global Notes in definitive form without Coupons. On or after the

                                       26

<PAGE>

Exchange Date such temporary Global Note shall be surrendered by the Common
Depositary to the Trustee, as the Company's agent for such purpose, at such
address as the Trustee may specify and following such surrender, the Trustee
shall (1) endorse the temporary Global Note to reflect the reduction of its
principal amount by an equal aggregate principal amount of such Debt Security,
(2) endorse the applicable Permanent Global Note, if any, to reflect the initial
amount, or an increase in the amount of Debt Securities represented thereby, (3)
manually authenticate such definitive Debt Securities (including any Permanent
Global Note), (4) deliver such definitive Debt Securities to the Holder thereof
or, if such definitive Debt Security is a Permanent Global Note, deliver such
Permanent Global Note to the Common Depositary to be held outside the United
States for the accounts of Euroclear or Clearstream, as the case may be, for
credit to the respective accounts at Euroclear or Clearstream, as the case may
be, designated by or on behalf of the beneficial owners of such Debt Securities
(or to such other accounts as they may direct) and (5) redeliver such temporary
Global Note to the Common Depositary, unless such temporary Global Note shall
have been canceled in accordance with Section 3.8 hereof; provided, however,
that, unless otherwise specified in such temporary Global Note, upon such
presentation by the Common Depositary, such temporary Global Note shall be
accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear, as to the portion of such temporary Global Note held for
its account then to be exchanged for definitive Debt Securities (including any
Permanent Global Note), and a certificate dated the Exchange Date or a
subsequent date and signed by Clearstream, as to the portion of such temporary
Global Note held for its account then to be exchanged for definitive Debt
Securities (including any Permanent Global Note), each substantially in the form
set forth in Exhibit B to this Indenture. Each certificate substantially in the
form of Exhibit B hereto of Euroclear or Clearstream, as the case may be, shall
be based on certificates of the account holders listed in the records of
Euroclear or Clearstream, as the case may be, as being entitled to all or any
portion of the applicable temporary Global Note. An account holder of Euroclear
or Clearstream, as the case may be, desiring to effect the exchange of an
interest in a temporary Global Note for an interest in definitive Debt
Securities (including any Permanent Global Note) shall instruct Euroclear or
Clearstream, as the case may be, to request such exchange on its behalf and
shall deliver to Euroclear or Clearstream, as the case may be, a certificate
substantially in the form of Exhibit A hereto and dated no earlier than 10 days
prior to the Exchange Date. Until so exchanged, temporary Global Notes shall in
all respects be entitled to the same benefits under this Indenture as definitive
Debt Securities (including any Permanent Global Note) of the same series
authenticated and delivered hereunder, except as to payment of interest, if any.

      The delivery to the Trustee by Euroclear or Clearstream of any certificate
substantially in the form of Exhibit B hereto may be relied upon by the Company
and the Trustee as conclusive evidence that a corresponding certificate or
certificates has or have been delivered to Euroclear or Clearstream, as the case
may be, pursuant to the terms of this Indenture.

      On or prior to the Exchange Date, the Company shall deliver to the Trustee
definitive Debt Securities in an aggregate principal amount equal to the
principal amount of such temporary Global Note, executed by the Company. At any
time, on or after the Exchange Date, upon 30 days' notice to the Trustee by
Euroclear or Clearstream, as the case may be, acting at the request of or on
behalf of the beneficial owner, a Debt Security represented by a temporary
Global Note or a Permanent Global Note, as the case may be, may be exchanged, in
whole or

                                       27

<PAGE>

from time to time in part, for definitive Debt Securities without charge and the
Trustee shall authenticate and deliver, in exchange for each portion of such
temporary Global Note or such Permanent Global Note, an equal aggregate
principal amount of definitive Debt Securities of the same series of authorized
denominations and of a like Stated Maturity and with like terms and conditions,
as the portion of such temporary Global Note or such Permanent Global Note to be
exchanged, which, unless the Debt Securities of the series are not issuable both
as Bearer Securities and as Registered Securities, as contemplated by Section
3.1, shall be in the form of Bearer Securities or Registered Securities, or any
combination thereof, as shall be specified by the beneficial owner thereof;
provided, however, that definitive Bearer Securities shall be delivered in
exchange for a portion of the temporary Global Note or the Permanent Global Note
only in compliance with the requirements of the second preceding paragraph. On
or prior to the forty-fifth day following receipt by the Trustee of such notice
with respect to a Debt Security, or, if such day is not a Business Day, the next
succeeding Business Day, the temporary Global Note or the Permanent Global Note,
as the case may be, shall be surrendered by the Common Depositary to the
Trustee, as the Company's agent for such purpose, to be exchanged, in whole or
from time to time in part, for definitive Debt Securities without charge
following such surrender, upon the request of Euroclear or Clearstream, as the
case may be, and the Trustee shall (1) endorse the applicable temporary Global
Note or the Permanent Global Note to reflect the reduction of its principal
amount by the aggregate principal amount of such Debt Security, (2) cause the
terms of such Debt Security and Coupons, if any, to be entered on a definitive
Debt Security, (3) manually authenticate such definitive Debt Security, and (4)
if a Bearer Security is to be delivered, deliver such definitive Debt Security
to an address outside the United States to Euroclear or Clearstream, as the case
may be, for or on behalf of the beneficial owner thereof, in exchange for a
portion of such temporary Global Note or the Permanent Global Note.

      Unless otherwise specified in such temporary Global Note or the Permanent
Global Note, any such exchange shall be made free of charge to the beneficial
owners of such temporary Global Note or the Permanent Global Note, except that a
Person receiving definitive Debt Securities must bear the cost of insurance,
postage, transportation and the like in the event that such Person does not take
delivery of such definitive Debt Securities in person at the offices of
Euroclear or Clearstream. Definitive Debt Securities in bearer form to be
delivered in exchange for any portion of a temporary Global Note or the
Permanent Global Note shall be delivered only to an address outside the United
States. Notwithstanding the foregoing, in the event of redemption or
acceleration of all or any part of a temporary Global Note prior to the Exchange
Date, a Permanent Global Note or definitive Bearer Securities, as the case may
be, will not be issuable in respect of such temporary Global Note or such
portion thereof, and payment thereon will instead be made as provided in such
temporary Global Note.

      Until exchanged in full as hereinabove provided, any temporary Global Note
or the Permanent Global Note shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of the same series
and tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 3.1, interest payable on such temporary
Global Note on an Interest Payment Date for Debt Securities of such series
occurring prior to the applicable Exchange Date shall be payable to Euroclear or
Clearstream on such Interest Payment Date upon delivery by Euroclear or
Clearstream to the Trustee of a certificate or certificates substantially in the
form set forth in Exhibit B to this Indenture, for credit without further
interest on or after such Interest Payment Date to the respective accounts of
the Persons

                                       28

<PAGE>

who are the beneficial owners of such temporary Global Note on such Interest
Payment Date and who have each delivered to Euroclear or Clearstream, as the
case may be, a certificate substantially in the form set forth in Exhibit A to
this Indenture.

      Any definitive Bearer Security authenticated and delivered by the Trustee
in exchange for a portion of a temporary Global Note or the Permanent Global
Note shall not bear a coupon for any interest which shall theretofore have been
duly paid by the Trustee to Euroclear or Clearstream, or by the Company to the
Trustee in accordance with the provisions of this Section 3.4.

      With respect to Exhibits A and B to this Indenture, the Company may, in
its discretion and if required or desirable under applicable law or as set forth
in or established pursuant to any Board Resolution or supplemental indenture
with respect to any series of Debt Securities, substitute one or more other
forms of such exhibits for such exhibits, eliminate the requirement that any or
all certificates be provided, or change the time that any certificate may be
required, provided that such substitute form or forms or notice of elimination
or change of such certification requirement have theretofore been delivered to
the Trustee with a Company Request and such form or forms, elimination or change
is reasonably acceptable to the Trustee.

      (c) If the Company shall establish pursuant to Section 3.1 that the
Registered Securities of a series are to be issued in whole or in part in the
form of one or more Global Notes, then the Company shall execute and the Trustee
shall, in accordance with Section 3.3 and the Company Order with respect to such
series, authenticate and deliver one or more Global Notes in temporary or
Permanent form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding Debt Securities of
such series to be represented by one or more Global Notes, (ii) shall be
registered in the name of the U.S. Depositary for such Global Note or Notes or
the nominee of such depositary, and (iii) shall bear a legend substantially to
the following effect: "This Debt Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary, unless and until this Debt Security is exchanged in whole
or in part for Debt Securities in definitive form."

      Notwithstanding any other provision of this Section 3.4 or Section 3.5,
unless and until it is exchanged in whole or in part for Registered Securities
in definitive form, a Global Note representing all or a portion of the
Registered Securities of a series may not be transferred except as a whole by
the U.S. Depositary for such series to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor U.S.
Depositary for such series or a nominee of such successor depositary.

      If at any time the U.S. Depositary for the Debt Securities of a series
notifies the Company that it is unwilling or unable to continue as U.S.
Depositary for the Debt Securities of such series or if at any time the U.S.
Depositary for Debt Securities of a series shall no longer be a clearing agency
registered and in good standing under the Securities Exchange Act of 1934, as
amended, or other applicable statute or regulation, the Company shall appoint a
successor U.S. Depositary with respect to the Debt Securities of such series. If
a successor U.S. Depositary for the Debt

                                       29

<PAGE>

Securities of such series is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such condition, the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Debt Securities of such series, will
authenticate and deliver, Registered Securities of such series in definitive
form in an aggregate principal amount equal to the principal amount of the
Global Note or Notes representing such series in exchange for such Global Note
or Notes.

      The Company may at any time and in its sole discretion, subject to the
procedures of the U.S. Depositary, determine that the Registered Securities of
any series issued in the form of one or more Global Notes shall no longer be
represented by such Global Note or Notes. In such event, the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive Debt Securities of such series, will authenticate and
deliver, Registered Securities of such series in definitive form and in an
aggregate principal amount equal to the principal amount of the Global Note or
Notes representing such series in exchange for such Global Note or Notes.

      If the Registered Securities of any series shall have been issued in the
form of one or more Global Notes and if an Event of Default with respect to the
Debt Securities of such series shall have occurred and be continuing, the
Company will promptly execute, and the Trustee, upon receipt of a Company Order
for the authentication and delivery of definitive Debt Securities of such
series, will authenticate and deliver, Registered Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Note or Notes representing such series in exchange for such
Global Note or Notes.

      If specified by the Company pursuant to Section 3.1 with respect to
Registered Securities of a series, the U.S. Depositary for such series of
Registered Securities may surrender a Global Note for such series of Debt
Securities in exchange in whole or in part for Registered Securities of such
series in definitive form on such terms as are acceptable to the Company and
such depositary. Thereupon, the Company shall execute and the Trustee shall
authenticate and deliver, without charge:

            (i) to each Person specified by the U.S. Depositary a new Registered
      Security or Securities of the same series, of any authorized denomination
      as requested by such Person in an aggregate principal amount equal to and
      in exchange for such Person's beneficial interest in the Global Note; and

            (ii) to the U.S. Depositary a new Global Note in a denomination
      equal to the difference, if any, between the principal amount of the
      surrendered Global Note and the aggregate principal amount of Registered
      Securities delivered to Holders thereof.

      Upon the exchange of a Global Note for Registered Securities in definitive
form, such Global Note shall be canceled by the Trustee. Debt Securities issued
in exchange for a Global Note pursuant to this subsection (c) shall be
registered in such names and in such authorized denominations as the U.S.
Depositary for such Global Note, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Debt Securities to the Persons in whose names such Debt
Securities are so registered.

                                       30

<PAGE>

      No holder of any beneficial interest in any Global Note held on its behalf
by a U.S. Depositary (or its nominee) shall have any rights under this Indenture
with respect to such Global Note or any Debt Security represented thereby, and
such U.S. Depositary may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the owner of such Global Note or any Debt Security
represented thereby for all purposes whatsoever. None of the Company, the
Trustee nor any agent of the Company or the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Note or maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. Notwithstanding the foregoing, with respect to any Global Note,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by a U.S. Depositary or impair, as between a
U.S. Depositary and such holders of beneficial interest, the operation of
customary practices governing the exercise of the rights of the U.S. Depositary
(or its nominees) as Holder of any Debt Security.

      Section 3.5. Registration, transfer and exchange.

      (a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office or in any other
office or agency of the Company in a Place of Payment being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and of transfers and exchanges of Registered
Securities. Such Security Register shall be in written form in the English
language or in any other form capable of being accurately and completely
converted into such form within a reasonable time. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Registered
Securities and registering transfers and exchanges of Registered Securities as
herein provided; provided, however, that the Company may appoint co-Security
Registrars unless the terms of any series of Debt Securities provide otherwise.

      Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee, one or more new Registered Securities of
the same series of like aggregate principal amount of such denominations as are
authorized for Registered Securities of such series and of a like Stated
Maturity and with like terms and conditions.

      Except as otherwise provided in Section 3.4 and this Section 3.5, at the
option of the Holder, Registered Securities of any series may be exchanged for
other Registered Securities of the same series of like aggregate principal
amount and of a like Stated Maturity and with like terms and conditions, upon
surrender of the Registered Securities to be exchanged at such office or agency.
Whenever any Registered Securities are surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive.

      (b) If and to the extent specified pursuant to Section 3.1, the provisions
of this Section 3.5(b) shall be applicable to Debt Securities of any series
which are Bearer Securities. At the option of the Holder thereof, to the extent
permitted by law, any Bearer Security of any

                                       31

<PAGE>

series which by its terms is registrable as to principal and interest may be
exchanged for a Registered Security of such series of like aggregate principal
amount and of a like Stated Maturity and with like terms and conditions upon
surrender of such Bearer Security at the Corporate Trust Office or at any other
office or agency of the Company designated pursuant to Section 3.1 for the
purpose of making any such exchanges. Any Coupon Security surrendered for
exchange shall be surrendered with all unmatured Coupons and any matured Coupons
in default attached thereto. If the Holder of a Bearer Security is unable to
produce any such unmatured Coupon or Coupons or matured Coupon or Coupons in
default, such exchange may be effected if the Bearer Securities are accompanied
by payment in funds acceptable to the Company in an amount equal to the face
amount of such missing Coupon or Coupons, or the surrender of such missing
Coupon or Coupons may be waived by the Company and the Trustee if there is
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to any Paying Agent any such missing Coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; provided, however, that except as otherwise
provided in Section 12.3, interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in exchange
for a Registered Security of the same series and of a like Stated Maturity and
with like terms and conditions after the close of business at such office or
agency on (i) any Regular Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date, or (ii) any Special
Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Security
shall be surrendered without the Coupon relating to such Interest Payment Date
or proposed date for payment, as the case may be (or, if such Coupon is so
surrendered with such Bearer Security, such Coupon shall be returned to the
Person so surrendering the Bearer Security), and interest or Defaulted Interest,
as the case may be, will not be payable on such Interest Payment Date or
proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such Coupon when due in accordance with the provisions of this
Indenture. The Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Security or Securities which the Holder making the
exchange is entitled to receive.

      Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States income
tax laws and regulations applicable to Debt Securities in effect at the time of
such exchange.

      (c) Except as otherwise specified pursuant to Section 3.1, in no event may
Registered Securities, including Registered Securities received in exchange for
Bearer Securities, be exchanged for Bearer Securities.

      (d) All Debt Securities issued upon any transfer or exchange of Debt
Securities shall be valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Debt Securities
surrendered for such transfer or exchange.

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<PAGE>

      Every Registered Security presented or surrendered for transfer or
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar, duly executed, by the Holder thereof or
his attorney duly authorized in writing.

      No service charge will be made for any transfer or exchange of Debt
Securities except as provided in Sections 3.4(b) or 3.6. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration, transfer or exchange of Debt
Securities, other than those expressly provided in this Indenture to be made at
the Company's own expense or without expense or without charge to the Holders.

      The Company shall not be required (i) to register, transfer or exchange
Debt Securities of any series during a period beginning at the opening of
business 15 days before the day of the transmission of a notice of redemption of
Debt Securities of such series selected for redemption under Section 13.3 and
ending at the close of business on the day of such transmission, or (ii) to
register, transfer or exchange any Debt Security so selected for redemption in
whole or in part, except the unredeemed portion of any Debt Security being
redeemed in part.

      Each Holder of a Security agrees to indemnify and save harmless the
Company and the Trustee against any liability that may result from the transfer,
exchange or assignment of such Holder's Security in violation of any provision
of this Indenture and/or applicable United States Federal or state securities
law.

      The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among depositary
participants or beneficial owners of interests in any Global Note) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

      Neither the Trustee nor any agent thereof shall have any responsibility
for any actions taken or not taken by any depositary.

      Section 3.6. Mutilated, destroyed, lost and stolen Debt Securities.

      If (i) any mutilated Debt Security or any mutilated Coupon with the Coupon
Security to which it appertains (and all unmatured Coupons attached thereto) is
surrendered to the Trustee at its Corporate Trust Office, or (ii) the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Debt Security or any Coupon, and there is delivered to the
Company and the Trustee security or indemnity satisfactory to them to save each
of them and any Paying Agent harmless, and neither the Company nor the Trustee
receives notice that such Debt Security or Coupon has been acquired by a bona
fide purchaser, then the Company shall execute and upon Company Request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Debt Security or in

                                       33

<PAGE>

exchange for the Coupon Security to which such mutilated, destroyed, lost or
stolen Coupon appertained, a new Debt Security of the same series of like Stated
Maturity and with like terms and conditions and like principal amount, bearing a
number not contemporaneously Outstanding, and, in the case of a Coupon Security,
with such Coupons attached thereto that neither gain nor loss in interest shall
result from such exchange or substitution.

      In case any such mutilated, destroyed, lost or stolen Debt Security or
Coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debt Security, pay the amount due on
such Debt Security or Coupon in accordance with its terms; provided, however,
that principal of (and premium, if any) and any interest on Bearer Securities
shall, except as otherwise provided in Section 12.3, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 3.1 or except as otherwise provided in this
Section 3.6, any interest on Bearer Securities shall be payable only upon
presentation and surrender of the Coupons appertaining thereto.

      Upon the issuance of any new Debt Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

      Every new Debt Security or Coupon of any series issued pursuant to this
Section shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Debt Security or Coupon
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Debt Securities or Coupons of that series duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities or Coupons.

      Section 3.7. Payment of interest; interest rights preserved.

      (a) Unless otherwise specified as contemplated by Section 3.1 with respect
to the Debt Securities of any series, interest on any Registered Security which
is payable and is punctually paid or duly provided for on any Interest Payment
Date shall be paid to the Person in whose name such Registered Security (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest notwithstanding the cancellation of such
Registered Security upon any transfer or exchange subsequent to the Regular
Record Date. Unless otherwise specified as contemplated by Section 3.1 with
respect to the Debt Securities of any series, payment of interest on Registered
Securities shall be made at the place or places specified pursuant to Section
3.1 or, at the option of the Company, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register
or, if provided pursuant to Section 3.1, by wire transfer to an account
designated by the Registered Holder.

      (b) Interest on any Coupon Security which is payable and is punctually
paid or duly provided for on any Interest Payment Date shall be paid to the
Holder of the Coupon which has

                                       34

<PAGE>

matured on such Interest Payment Date upon surrender of such Coupon on such
Interest Payment Date at the Corporate Trust Office of the Trustee or at such
other Place of Payment outside the United States specified pursuant to Section
3.1 (subject to the second to last paragraph of Section 12.3).

      (c) Interest on any Bearer Security (other than a Coupon Security) which
is payable and is punctually paid or duly provided for on any Interest Payment
Date shall be paid to the Holder of the Bearer Security upon presentation of
such Bearer Security and notation thereon on such Interest Payment Date at the
Corporate Trust Office of the Trustee or at such other Place of Payment
maintained by the Company outside the United States specified pursuant to
Section 3.1 (subject to the second to last paragraph of Section 12.3).

      Unless otherwise specified pursuant to Section 3.1, at the direction of
the Holder of any Bearer Security or Coupon payable in Dollars, payment on such
Bearer Security or Coupon may be made by check drawn on a bank in The City of
[____] or, if agreeable to the Trustee, by wire transfer to a Dollar account
maintained by such Holder outside the United States. If such payment at the
offices of all Paying Agents outside the United States becomes illegal or is
effectively precluded because of the imposition of exchange controls or similar
restrictions on the full payment or receipt of such amounts in Dollars, the
Company will appoint an office or agent in the United States at which such
payment may be made. Unless otherwise specified pursuant to Section 3.1, at the
direction of the Holder of any Bearer Security or Coupon payable in a Foreign
Currency, payment on such Bearer Security or Coupon will be made by a check
drawn on a bank outside the United States or by wire transfer to an appropriate
account maintained by such Holder outside the United States. Except as provided
in this paragraph, no payment on any Bearer Security or Coupon will be made by
mail to an address in the United States or by wire transfer to an account in the
United States.

      (d) Any interest on any Debt Security which is payable but is not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest") shall, if such Debt Security is a Registered Security,
forthwith cease to be payable to the Registered Holder on the relevant Regular
Record Date by virtue of his having been such Registered Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:

            (1) The Company may elect to make payment of any Defaulted Interest
      to the Persons in whose names such Registered Securities (or their
      respective Predecessor Securities) are registered at the close of business
      on a Special Record Date for the payment of such Defaulted Interest, which
      shall be fixed in the following manner. The Company shall notify the
      Trustee in writing of the amount of Defaulted Interest proposed to be paid
      on each such Registered Security and the date of the proposed payment, and
      at the same time the Company shall deposit with the Trustee an amount of
      money in the Currency or Currency unit in which the Debt Securities of
      such series are payable (except as otherwise specified pursuant to
      Sections 3.1 or 3.10) equal to the aggregate amount proposed to be paid in
      respect of such Defaulted Interest or shall make arrangements satisfactory
      to the Trustee for such deposit prior to the date of the proposed payment,
      such money when deposited to be held in trust for the benefit

                                       35

<PAGE>

      of the Persons entitled to such Defaulted Interest as in this clause
      provided. Thereupon the Trustee shall fix a Special Record Date for the
      payment of such Defaulted Interest which date shall be not more than 15
      days and not less than 10 days prior to the date of the proposed payment
      and not less than 10 days after the receipt by the Trustee of the notice
      of the proposed payment. The Trustee shall promptly notify the Company of
      such Special Record Date and, in the name and at the expense of the
      Company, shall cause notice of the proposed payment of such Defaulted
      Interest and the Special Record Date therefor to be mailed, first-class
      postage prepaid, to the Holders of such Registered Securities at their
      addresses as they appear in the Security Register, not less than 10 days
      prior to such Special Record Date. Notice of the proposed payment of such
      Defaulted Interest and the Special Record Date therefor having been mailed
      as aforesaid, such Defaulted Interest shall be paid to the Persons in
      whose names such Registered Securities (or their respective Predecessor
      Securities) are registered at the close of business on such Special Record
      Date and shall no longer be payable pursuant to the following clause (2).

            (2) The Company may make payment of any Defaulted Interest on
      Registered Securities in any other lawful manner not inconsistent with the
      requirements of any securities exchange on which such Registered
      Securities may be listed, and upon such notice as may be required by such
      exchange, if, after notice given by the Company to the Trustee of the
      proposed payment pursuant to this clause, such manner of payment shall be
      deemed practicable by the Trustee.

      (d) Any Defaulted Interest payable in respect of Bearer Securities of any
series shall be payable pursuant to such procedures as may be satisfactory to
the Trustee in such manner that there is no discrimination between the Holders
of Registered Securities (if any) and Bearer Securities of such series, and
notice of the payment date therefor shall be given by the Trustee, in the name
and at the expense of the Company, in the manner provided in Section 1.5 not
more than 25 days and not less than 20 days prior to the date of the proposed
payment.

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

      Section 3.8. Cancellation.

      Unless otherwise specified pursuant to Section 3.1 for Debt Securities of
any series, all Debt Securities surrendered for payment, redemption, transfer,
exchange or credit against any sinking fund and all Coupons surrendered for
payment or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee. All Registered Securities and matured Coupons so
delivered shall be promptly canceled by the Trustee. All Bearer Securities and
unmatured Coupons so delivered shall be held by the Trustee and, upon
instruction by the Company Order, shall be canceled or held for reissuance.
Bearer Securities and unmatured Coupons held for reissuance may be reissued only
in exchange for Bearer Securities of the same series and of like Stated Maturity
and with like terms and conditions pursuant to Section 3.5 or in

                                       36

<PAGE>

replacement of mutilated, lost, stolen or destroyed Bearer Securities of the
same series and of like Stated Maturity and with like terms and conditions or
the related Coupons pursuant to Section 3.6. All Bearer Securities and unmatured
Coupons held by the Trustee pending such cancellation or reissuance shall be
deemed to be delivered for cancellation for all purposes of this Indenture and
the Securities. The Company may at any time deliver to the Trustee for
cancellation any Debt Securities or Coupons previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Debt Securities previously authenticated
hereunder which the Company has not issued, and all Debt Securities or Coupons
so delivered shall be promptly canceled by the Trustee. No Debt Securities or
Coupons shall be authenticated in lieu of or in exchange for any Debt Securities
or Coupons canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Debt Securities and Coupons held by the Trustee
shall be delivered to the Company upon Company Request. The acquisition of any
Debt Securities or Coupons by the Company shall not operate as a redemption or
satisfaction of the indebtedness represented thereby unless and until such Debt
Securities or Coupons are surrendered to the Trustee for cancellation.

      Section 3.9. Computation of interest.

      Except as otherwise specified pursuant to Section 3.1 for Debt Securities
of any series, interest on the Debt Securities of each series shall be computed
on the basis of a 360-day year of twelve 30-day months.

      Section 3.10. Currency of payments in respect of Debt Securities.

      (a) Except as otherwise specified pursuant to Section 3.1 for Bearer
Securities of any series, payment of the principal of (and premium, if any) and
interest on Bearer Securities of such series denominated in any Currency will be
made in such Currency.

      (b) With respect to Registered Securities of any series not permitting the
election provided for in paragraph (c) below or the Holders of which have not
made the election provided for in paragraph (c) below, except as provided in
paragraph (e) below, payment of the principal of (and premium, if any) and any
interest on any Registered Security of such series will be made in the Currency
in which such Registered Security is payable.

      (c) It may be provided pursuant to Section 3.1 with respect to the
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (e) and (f) below (and provided that in no instance may such
election be made after a defeasance pursuant to Article XV or during the
continuance of an Event of Default), to receive payments of principal of (and
premium, if any) and any interest on such Registered Securities in any of the
Currencies which may be designated for such election in the applicable
supplemental indenture or by or pursuant to a Board Resolution by delivering to
the Trustee a written election, to be in form and substance satisfactory to the
Trustee, not later than the close of business on the Election Date immediately
preceding the applicable payment date. If a Holder so elects to receive such
payments in any such Currency, such election will remain in effect for such
Holder or any transferee of such Holder until changed by such Holder or such
transferee by written notice to the Trustee (but any such change must be made
not later than the close of business on the

                                       37

<PAGE>

Election Date immediately preceding the next payment date to be effective for
the payment to be made on such payment date and no such change or election may
be made with respect to payments to be made on any Registered Security of such
series with respect to which an Event of Default has occurred or notice of
redemption has been given by the Company pursuant to Article XIII). Any Holder
of any such Registered Security who shall not have delivered any such election
to the Trustee by the close of business on the applicable Election Date will be
paid the amount due on the applicable payment date in the relevant Currency as
provided in paragraph (b) of this Section 3.10.

      (d) If the election referred to in paragraph (c) above has been provided
for pursuant to Section 3.1, then not later than the fourth Business Day after
the Election Date for each payment date, the Trustee will deliver to the Company
a written notice specifying, in the Currency in which each series of the
Registered Securities is payable, the respective aggregate amounts of principal
of (and premium, if any) and any interest on the Registered Securities to be
paid on such payment date, specifying the amounts so payable in respect of the
Registered Securities as to which the Holders of Registered Securities
denominated in any Currency shall have elected to be paid in another Currency as
provided in paragraph (c) above. If the election referred to in paragraph (c)
above has been provided for pursuant to Section 3.1 and if at least one Holder
has made such election, then, on the second Business Day preceding each payment
date, the Company will deliver to the Trustee an Exchange Rate Officer's
Certificate in respect of the Currency payments to be made on such payment date.
The Currency amount receivable by Holders of Registered Securities who have
elected payment in a Currency as provided in paragraph (c) above shall be
determined by the Company on the basis of the applicable Market Exchange Rate in
effect on the third Business Day (the "Valuation Date") immediately preceding
each payment date.

      (e) If a Conversion Event occurs with respect to a Foreign Currency or a
Currency unit in which any of the Debt Securities are denominated or payable
other than pursuant to an election provided for pursuant to paragraph (c) above,
then with respect to each date for the payment of principal of (and premium, if
any) and any interest on the applicable Debt Securities denominated or payable
in such Foreign Currency or such other Currency unit occurring after the last
date on which such Foreign Currency or such other Currency unit was used (the
"Conversion Date"), the Dollar shall be the Currency of payment for use on each
such payment date. The Dollar amount to be paid by the Company to the Trustee
and by the Trustee or any Paying Agent to the Holders of such Debt Securities
with respect to such payment date shall be the Dollar Equivalent of the Foreign
Currency or, in the case of a Currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Currency Determination Agent,
if any, or, if there shall not be a Currency Determination Agent, then by the
Trustee, in the manner provided in paragraph (g) or (h) below.

      (f) If the Holder of a Registered Security denominated in any Currency
shall have elected to be paid in another Currency as provided in paragraph (c)
above, and a Conversion Event occurs with respect to such elected Currency, such
Holder shall receive payment in the Currency in which payment would have been
made in the absence of such election. If a Conversion Event occurs with respect
to the Currency in which payment would have been made in the absence of such
election, such Holder shall receive payment in Dollars as provided in paragraph
(e) of this Section 3.10.

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<PAGE>

      (g) The "Dollar Equivalent of the Foreign Currency" shall be determined by
the Currency Determination Agent, and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Conversion Date.

      (h) The "Dollar Equivalent of the Currency Unit" shall be determined by
the Currency Determination Agent, and subject to the provisions of paragraph (i)
below, shall be the sum of each amount obtained by converting the Specified
Amount of each Component Currency into Dollars at the Market Exchange Rate for
such Component Currency on the Valuation Date with respect to each payment.

      (i) For purposes of this Section 3.10 the following terms shall have the
following meanings:

            A "Component Currency" shall mean any Currency which, on the
      Conversion Date, was a component Currency of the relevant Currency unit.

            A "Specified Amount" of a Component Currency shall mean the number
      of units of such Component Currency or fractions thereof which were
      represented in the relevant Currency unit on the Conversion Date. If after
      the Conversion Date the official unit of any Component Currency is altered
      by way of combination or subdivision, the Specified Amount of such
      Component Currency shall be divided or multiplied in the same proportion.
      If after the Conversion Date two or more Component Currencies are
      consolidated into a single Currency, the respective Specified Amounts of
      such Component Currencies shall be replaced by an amount in such single
      Currency equal to the sum of the respective Specified Amounts of such
      consolidated Component Currencies expressed in such single Currency, and
      such amount shall thereafter be a Specified Amount and such single
      Currency shall thereafter be a Component Currency. If after the Conversion
      Date any Component Currency shall be divided into two or more Currencies,
      the Specified Amount of such Component Currency shall be replaced by
      amounts of such two or more Currencies with appropriate Dollar equivalents
      at the Market Exchange Rate on the date of such replacement equal to the
      Dollar equivalent of the Specified Amount of such former Component
      Currency at the Market Exchange Rate on such date, and such amounts shall
      thereafter be Specified Amounts and such Currencies shall thereafter be
      Component Currencies. If after the Conversion Date of the relevant
      Currency unit, a Conversion Event (other than any event referred to above
      in this definition of "Specified Amount") occurs with respect to any
      Component Currency of such Currency unit, the Specified Amount of such
      Component Currency shall, for purposes of calculating the Dollar
      Equivalent of the Currency Unit, be converted into Dollars at the Market
      Exchange Rate in effect on the Conversion Date of such Component Currency.

            "Election Date" shall mean the earlier of (i) the seventh Business
      Day immediately preceding any payment date or (ii) the record date with
      respect to any payment date, and with respect to the Maturity shall mean
      the record date (if

                                       39

<PAGE>

      within 16 or fewer days prior to the Maturity) immediately preceding the
      Maturity, and with respect to any series of Debt Securities whose record
      date immediately preceding the Maturity is more than 16 days prior to the
      Maturity or any series of Debt Securities for which no record dates are
      provided with respect to interest payments, shall mean the date which is
      16 days prior to the Maturity.

      (j) All decisions and determinations of the Trustee or the Currency
Determination Agent, if any, regarding the Dollar Equivalent of the Foreign
Currency, the Dollar Equivalent of the Currency Unit and the Market Exchange
Rate shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive for all purposes and irrevocably binding upon the Company
and all Holders of the Debt Securities denominated or payable in the relevant
Currency. In the event of a Conversion Event with respect to a Foreign Currency,
the Company, after learning thereof, will immediately give written notice
thereof to the Trustee (and the Trustee will promptly thereafter give notice in
the manner provided in Section 1.5 to the Holders) specifying the Conversion
Date. In the event of a Conversion Event with respect to a Currency unit in
which Debt Securities are denominated or payable, the Company, after learning
thereof, will immediately give notice thereof to the Trustee (and the Trustee
will promptly thereafter give written notice in the manner provided in Section
1.5 to the relevant Holders) specifying the Conversion Date and the Specified
Amount of each Component Currency on the Conversion Date. In the event of any
subsequent change in any Component Currency as set forth in the definition of
Specified Amount above, the Company, after learning thereof, will similarly give
written notice to the Trustee. The Trustee shall be fully justified and
protected in relying and acting upon information received by it from the Company
and the Currency Determination Agent, if any, and shall not otherwise have any
duty or obligation to determine such information independently.

      (k) For purposes of any provision of the Indenture where the Holders of
Outstanding Debt Securities may perform an Act which requires that a specified
percentage of the Outstanding Debt Securities of all series perform such Act and
for purposes of any decision or determination by the Trustee of amounts due and
unpaid for the principal (and premium, if any) and interest on the Debt
Securities of all series in respect of which moneys are to be disbursed ratably,
the principal of (and premium, if any) and interest on the Outstanding Debt
Securities denominated in a Foreign Currency will be the amount in Dollars based
upon the Market Exchange Rate for Debt Securities of such series, as of the date
for determining whether the Holders entitled to perform such Act have performed
it, or as of the date of such decision or determination by the Trustee, as the
case may be.

      (l) The Company hereby appoints itself as the initial Currency
Determination Agent and the Company shall be entitled to remove such agent at
any time; provided, however, that such removal shall not be effective and the
agent may not resign until a successor has been appointed by the Company and the
successor has accepted such appointment. The Trustee is under no duty or
obligation to serve in the capacity of Currency Determination Agent.

      Section 3.11. Judgments.

      If for the purpose of obtaining a judgment in any court with respect to
any obligation of the Company hereunder or under any Debt Security, it shall
become necessary to convert into

                                       40

<PAGE>

any other Currency any amount in the Currency due hereunder or under such Debt
Security, then such conversion shall be made at the Market Exchange Rate as in
effect on the date the Company shall make payment to any Person in satisfaction
of such judgment. If pursuant to any such judgment, conversion shall be made on
a date other than the date payment is made and there shall occur a change
between such Market Exchange Rate and the Market Exchange Rate as in effect on
the date of payment, the Company agrees to pay such additional amounts (if any)
as may be necessary to ensure that the amount paid is equal to the amount in
such other Currency which, when converted at the Market Exchange Rate as in
effect on the date of payment or distribution, is the amount then due hereunder
or under such Debt Security. Any amount due from the Company under this Section
3.11 shall be due as a separate debt and is not to be affected by or merged into
any judgment being obtained for any other sums due hereunder or in respect of
any Debt Security. In no event, however, shall the Company be required to pay
more in the Currency or Currency unit due hereunder or under such Debt Security
at the Market Exchange Rate as in effect when payment is made than the amount of
Currency stated to be due hereunder or under such Debt Security so that in any
event the Company's obligations hereunder or under such Debt Security will be
effectively maintained as obligations in such Currency, and the Company shall be
entitled to withhold (or be reimbursed for, as the case may be) any excess of
the amount actually realized upon any such conversion over the amount due and
payable on the date of payment or distribution.

      Section 3.12. Exchange upon default.

      If default is made in the payments referred to in Section 12.1, the
Company hereby undertakes that upon presentation and surrender of a Permanent
Global Note to the Trustee (or to any other Person or at any other address as
the Company may designate in writing), on any Business Day on or after the
maturity date of such defaulted payments the Company will issue and the Trustee
will authenticate and deliver to the bearer of such Permanent Global Note duly
executed and authenticated definitive Debt Securities with the same issue date
and maturity date as set out in such Permanent Global Note.

      Section 3.13 CUSIP Numbers.

      The Company in issuing the Debt Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Debt Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Debt Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Company will promptly
notify the Trustee in writing of any change in the "CUSIP" numbers.

                                       41
<PAGE>

                                  ARTICLE IV.

                           SATISFACTION AND DISCHARGE

      Section 4.1. Satisfaction and discharge of Indenture.

      This Indenture, with respect to the Debt Securities of any series (if all
series issued under this Indenture are not to be affected), shall, upon Company
Request, cease to be of further effect (except as to any surviving rights of
registration of transfer or exchange of such Debt Securities herein expressly
provided for and rights to receive payments of principal (and premium, if any)
and interest on such Debt Securities) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:

            (1) either

            (A) all Debt Securities and the Coupons, if any, of such series
      theretofore authenticated and delivered (other than (i) Debt Securities
      and Coupons of such series which have been destroyed, lost or stolen and
      which have been replaced or paid as provided in Section 3.6, (ii) Coupons
      appertaining to Bearer Securities surrendered for exchange for Registered
      Securities and maturing after such exchange, whose surrender is not
      required or has been waived under Section 3.5, (iii) Coupons appertaining
      to Bearer Securities called for redemption and maturing after the relevant
      Redemption Date, whose surrender has been waived as provided in Section
      13.6, and (iv) Debt Securities and Coupons of such series for whose
      payment money has theretofore been deposited in trust or segregated and
      held in trust by the Company and thereafter repaid to the Company or
      discharged from such trust, as provided in Section 12.4) have been
      delivered to the Trustee for cancellation; or

            (B) all Debt Securities and the Coupons, if any, of such series not
      theretofore delivered to the Trustee for cancellation,

                  (i) have become due and payable by reason of the giving of a
            notice of redemption or otherwise,

                  (ii) will become due and payable at their Stated Maturity
            within one year, or

                  (iii) are to be called for redemption within one year under
            arrangements satisfactory to the Trustee for the giving of notice of
            redemption by the Trustee in the name, and at the expense, of the
            Company

            and the Company either complies with any other condition or terms
            specified pursuant to Section 3.1 or, if not so specified in the
            case of (i) or (ii) or (iii) of this subclause (B), has irrevocably
            deposited or caused to be deposited with the Trustee as trust funds
            held in trust solely for the benefit of the Holders, cash in United
            States Dollars in an amount, U.S.

                                       42
<PAGE>

            Government Obligations (as defined in Section 15.2) which through
            the payment of interest and principal in respect thereof in
            accordance with their terms will provide, not later than one day
            before the due date of any payment, money in an amount, or a
            combination thereof, in such amounts as will be (except as otherwise
            provided pursuant to Section 3.1 or 3.10) sufficient, in the opinion
            of an independent firm of certified public accountants selected by
            the Company expressed in a written certification thereof delivered
            to the Trustee, without consideration of any reinvestment of
            interest, to pay and discharge the entire indebtedness on such Debt
            Securities not delivered to the Trustee for cancellation for
            principal, premium, if any and accrued interest to the date of such
            deposit (in the case of Debt Securities which have become due and
            payable) or to the Stated Maturity or Redemption Date, as the case
            may be;

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

            (3) the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel each stating that all conditions
      precedent herein provided for relating to the satisfaction and discharge
      of this Indenture with respect to such series have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14, the obligations of
the Company under Section 12.1, and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section 4.1, the
obligations of the Trustee under Section 4.2 and the last paragraph of Section
12.4, shall survive. If, after the deposit referred to in Section 4.1 has been
made, (x) the Holder of a Debt Security is entitled to, and does, elect pursuant
to Section 3.10(c), to receive payment in a Currency other than that in which
the deposit pursuant to Section 4.1 was made, or (y) if a Conversion Event
occurs with respect to the Currency in which the deposit was made or elected to
be received by the Holder pursuant to Section 3.10(c), then the indebtedness
represented by such Debt Security shall be fully discharged to the extent that
the deposit made with respect to such Debt Security shall be converted into the
Currency in which such payment is made.

      Section 4.2. Application of trust money.

      The Trustee and any Paying Agent shall promptly pay or return to the
Company upon Company Request any moneys or U.S. Government Obligations held by
them at any time that are not required for the payment of the principal of (and
premium, if any) and interest on the Debt Securities of any series for which
money or U.S. Government Obligations have been deposited pursuant to Section
4.1.

      Subject to the provisions of the last paragraph of Section 12.4, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Debt Securities and
Coupons, if any, and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as

                                       43
<PAGE>

the Trustee may determine, to the Persons entitled thereto, of the principal
(and premium, if any) and interest for whose payment such money has been
deposited with the Trustee.

                                   ARTICLE V.

                                    REMEDIES

      Section 5.1. Events of Default.

      "Event of Default" wherever used herein with respect to Debt Securities of
any series, and unless otherwise provided with respect to Debt Securities of any
series pursuant to Section 3.1, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):

            (1) default in the payment of any interest upon any Debt Security or
      any payment with respect to the Coupons, if any, of such series when it
      becomes due and payable, and continuance of such default for a period of
      30 days; or

            (2) default in the payment of the principal of (and premium, if any,
      on) any Debt Security of such series at its Maturity; or

            (3) default in the deposit of any sinking fund payment, when and as
      due by the terms of a Debt Security of such series, and the continuance of
      such default for a period of 30 days; or

            (4) default in the performance, or breach, of any covenant or
      warranty of the Company in this Indenture (other than a covenant or
      warranty a default in whose performance or whose breach is elsewhere in
      this Section specifically dealt with or which expressly has been included
      in this Indenture solely for the benefit of Debt Securities of a series
      other than such series), and continuance of such default or breach for a
      period of 90 days after there has been given, by registered or certified
      mail, to the Company by the Trustee or to the Company and the Trustee by
      the Holders of at least 25% in principal amount of the Outstanding Debt
      Securities of such series, a written notice specifying such default or
      breach and requiring it to be remedied and stating that such notice is a
      "Notice of Default" hereunder; or

            (5) the entry of a decree or order for relief in respect of the
      Company by a court having jurisdiction in the premises in an involuntary
      case under the Federal bankruptcy laws, as now or hereafter constituted,
      or any other applicable Federal or State bankruptcy, insolvency or other
      similar law, or a decree or order adjudging the Company a bankrupt or
      insolvent, or approving as properly filed a petition seeking
      reorganization, arrangement, adjustment or composition of or in respect of
      the Company under any applicable Federal or State law, or appointing a
      receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
      similar official) of the Company or of any substantial part of its
      property, or ordering the

                                       44
<PAGE>

      winding up or liquidation of its affairs, and the continuance of any such
      decree or order unstayed and in effect for a period of 90 consecutive
      days; or

            (6) the commencement by the Company of a voluntary case under the
      Federal bankruptcy laws, as now or hereafter constituted, or any other
      applicable Federal or State bankruptcy, insolvency or other similar law,
      or the consent by it to the entry of an order for relief in an involuntary
      case under any such law or to the appointment of a receiver, liquidator,
      assignee, custodian, trustee, sequestrator (or other similar official) of
      the Company or of any substantial part of its property, or the making by
      it of an assignment for the benefit of its creditors, or the admission by
      it in writing of its inability to pay its debts generally as they become
      due, or the taking of corporate action by the Company in furtherance of
      any such action; or

            (7) any other Event of Default provided with respect to Debt
      Securities of that series pursuant to Section 3.1.

      Section 5.2. Acceleration of maturity; rescission and annulment.

      If an Event of Default (unless otherwise provided with respect to Debt
Securities of any series pursuant to Section 3.1, other than an Event of Default
specified in clauses (5) or (6) of Section 5.1) with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case, unless the principal of all Debt Securities shall have already become
due and payable, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of such series may declare the
principal amount (or, if any Debt Securities of such series are Discount
Securities or indexed securities, such portion of the principal amount of such
Discount Securities as may be specified in the terms of such Discount Securities
or indexed securities) of all the Debt Securities of such series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount (or
specified amount) plus accrued and unpaid interest (and premium, if payable)
shall become immediately due and payable; provided however, that payment of such
principal and interest, if any, on the Debt Securities of such series shall
remain subordinated to the extent provided in Article XVII. Upon payment of such
amount in the Currency in which such Debt Securities are denominated (except as
otherwise provided pursuant to Sections 3.1 or 3.10), all obligations of the
Company in respect of the payment of principal of the Debt Securities of such
series shall terminate.

      At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article V provided, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if

            (1) the Company has paid or deposited with the Trustee a sum in the
      Currency in which such Debt Securities are denominated (except as
      otherwise provided pursuant to Section 3.1 or 3.10) sufficient to pay

                                       45
<PAGE>

                  (A)   all overdue installments of interest on all Debt
                        Securities or all overdue payments with respect to any
                        Coupons of such series,

                  (B)   the principal of (and premium, if any, on) any Debt
                        Securities of such series which have become due
                        otherwise than by such declaration of acceleration and
                        interest thereon at the rate or rates prescribed
                        therefor in such Debt Securities,

                  (C)   to the extent that payment of such interest is lawful,
                        interest upon overdue installments of interest on each
                        Debt Security of such series or upon overdue payments on
                        any Coupons of such series at the Overdue Rate, and

                  (D)   all sums paid or advanced by the Trustee hereunder and
                        the reasonable compensation, expenses, disbursements and
                        advances of the Trustee, its agents and counsel;
                        provided, however, that all sums payable under this
                        clause (D) shall be paid in Dollars;

            and

            (2) All Events of Default with respect to Debt Securities of such
      series, other than the nonpayment of the principal of Debt Securities of
      such series which has become due solely by such declaration of
      acceleration, have been cured or waived as provided in Section 5.13.

No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.

      Section 5.3. Collection of indebtedness and suits for enforcement by
Trustee.

      The Company covenants that if

            (1) default is made in the payment of any installment of interest on
      any Debt Security or any payment with respect to any Coupons when such
      interest or payment becomes due and payable and such default continues for
      a period of 30 days,

            (2) default is made in the payment of principal of (or premium, if
      any, on) any Debt Security at the Maturity thereof, or

            (3) default is made in the making or satisfaction of any sinking
      fund payment or analogous obligation when the same becomes due pursuant to
      the terms of the Debt Securities of any series, and such default continues
      for a period of 30 days,

                                       46
<PAGE>

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debt Securities or of such Coupons, the amount then due and
payable on such Debt Securities or matured Coupons, for the principal (and
premium, if any) and interest, if any, and, to the extent that payment of such
interest shall be legally enforceable, interest upon the overdue principal (and
premium, if any) and upon overdue installments of interest, at the Overdue Rate;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

      If the Company fails to pay such amount forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt Securities and Coupons,
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such Debt
Securities and Coupons wherever situated.

      If an Event of Default with respect to Debt Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Debt Securities and
Coupons of such series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.

      Section 5.4. Trustee may file proofs of claim.

      In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, relative to the Company or any
other obligor upon the Debt Securities and Coupons, if any, of a particular
series or all or substantially all of the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of such Debt Securities shall then be due and payable as therein
expressed or by declaration of acceleration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,

            (i) to file and prove a claim for the whole amount of principal (or,
      if the Debt Securities of such series are Discount Securities, such
      portion of the principal amount as may be due and payable with respect to
      such series pursuant to a declaration in accordance with Section 5.2) (and
      premium, if any) and interest owing and unpaid in respect of the Debt
      Securities and Coupons of such series and to file such other papers or
      documents as may be necessary or advisable in order to have the claims of
      the Trustee (including any claim for the reasonable compensation,
      expenses, disbursements and advances of the Trustee, its agents and
      counsel) and of the Holders of such Debt Securities and Coupons allowed in
      such judicial proceeding, and

                                       47
<PAGE>

            (ii) to collect and receive any moneys or other property payable or
      deliverable on any such claims and to distribute the same; and any
      receiver, assignee, trustee, custodian, liquidator, sequestrator (or other
      similar official) in any such proceeding is hereby authorized by each such
      Holder to make such payments to the Trustee, and in the event that the
      Trustee shall consent to the making of such payments directly to such
      Holders, to pay to the Trustee any amount due it for the reasonable
      compensation, expenses, disbursements and advances of the Trustee, its
      agents and counsel, and any other amounts due the Trustee under Section
      6.7.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debt
Securities and any Coupons of such series or the rights of any Holder thereof,
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

      Section 5.5. Trustee may enforce claims without possession of Debt
Securities.

      All rights of action and claims under this Indenture or the Debt
Securities and the Coupons, if any, of any series may be prosecuted and enforced
by the Trustee without the possession of any of such Debt Securities or Coupons
or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Debt Securities or Coupons in respect of which such judgment
has been recovered.

      Section 5.6. Application of money collected.

      Subject to Article XVIII, any money collected by the Trustee pursuant to
this Article V shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (and premium, if any) or interest, upon presentation of the Debt
Securities or Coupons of any series in respect of which money has been collected
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:

            FIRST: To the payment of all amounts due the Trustee under Section
      6.7.

            SECOND: To the payment of all Senior Indebtedness if and to the
      extent required by Article XVIII.

            THIRD: To the payment of the amounts then due and unpaid for
      principal of (and premium, if any) and interest on the Debt Securities or
      Coupons of such series, in respect of which or for the benefit of which
      such money has been collected ratably, without preference or priority of
      any kind, according to the amounts due and payable on such Debt Securities
      or Coupons for principal (and premium, if any) and interest, respectively;
      and

                                       48
<PAGE>

            FOURTH: The balance, if any, to the Person or Persons entitled
      thereto.

      Section 5.7. Limitation on suits.

      No Holder of any Debt Security or Coupon of any series shall have any
right to institute any action or proceeding, judicial or otherwise, at law or in
equity or in bankruptcy or otherwise with respect to this Indenture, or for the
appointment of a receiver, trustee, liquidator, custodian sequestrator (or other
similar official) or for any other remedy hereunder, unless

            (1) such Holder has previously given written notice to the Trustee
      of a continuing Event of Default with respect to such series,

            (2) the Holders of not less than 25% in principal amount of the
      Outstanding Debt Securities of such series shall have made written request
      to the Trustee to institute proceedings in respect of such Event of
      Default in its own name as Trustee hereunder,

            (3) such Holder or Holders have offered to the Trustee indemnity
      satisfactory to it against the costs, expenses and liabilities to be
      incurred in compliance with such request,

            (4) the Trustee for 60 days after its receipt of such notice,
      request and offer of indemnity has failed to institute any such
      proceeding, and

            (5) no direction inconsistent with such written request has been
      given to the Trustee during such 60-day period by the Holders of a
      majority in principal amount of the Outstanding Debt Securities of such
      series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders or of the Holders of Outstanding Debt Securities or Coupons of any other
series, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders (it being further understood that the Trustee does not have an
affirmative duty to ascertain whether such actions or forbearances are unduly
prejudicial to such Holders). For the protection and enforcement of the
provisions of this Section 5.7, each and every Holder of Debt Securities or
Coupons of any series and the Trustee for such series shall be entitled to such
relief as can be given at law or in equity.

      Section 5.8. Unconditional right of Holders to receive principal, premium
and interest.

      Notwithstanding any other provision in this Indenture, the Holder of any
Debt Security or of any Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 3.7) interest on such Debt Security or Coupon on the
respective Stated Maturity or Maturities expressed in such Debt Security or
Coupon (or, in the case of redemption, on the Redemption Date) and to institute
suit for the

                                       49
<PAGE>

enforcement of any such payment and interest thereon, and such right shall not
be impaired without the consent of such Holder.

      Section 5.9. Restoration of rights and remedies.

      If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Company, the Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions and rights hereunder, and
thereafter all rights and remedies of the Company, Trustee and the Holders shall
continue as though no such proceeding had been instituted.

      Section 5.10. Rights and remedies cumulative.

      Except as otherwise expressly provided elsewhere in this Indenture, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

      Section 5.11. Delay or omission not waiver.

      No delay or omission of the Trustee or of any Holder to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or any acquiescence
therein. Every right and remedy given by this Indenture or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.

      Section 5.12. Control by Holders.

      The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred by this Indenture on the Trustee with
respect to the Debt Securities of such series, provided, that:

            (1) such direction shall not be in conflict with any rule of law or
      with this Indenture;

            (2) subject to the provisions of Section 6.1, the Trustee shall have
      the right to decline to follow any such direction if the Trustee in good
      faith shall, by a Responsible Officer or Responsible Officers of the
      Trustee, determine that the proceeding so directed would be unjustly
      prejudicial to the Holders of Debt Securities of such series not joining
      in any such direction; and

                                       50
<PAGE>

            (3) the Trustee may take any other action deemed proper by the
      Trustee which is not inconsistent with such direction.

      Section 5.13. Waiver of past defaults.

      The Holders of not less than a majority in aggregate principal amount of
the Outstanding Debt Securities of any series, on behalf of the Holders of all
the Debt Securities of any such series, may waive any past default hereunder
with respect to such series and its consequences, except a default:

            (1) in the payment of the principal of (or premium, if any) or
      interest on any Debt Security of such series, or in the payment of any
      sinking fund installment or analogous obligation with respect to the Debt
      Securities of such series; or

            (2) in respect of a covenant or provision hereof which pursuant to
      Article XI cannot be modified or amended without the consent of the Holder
      of each Outstanding Debt Security of such series affected; provided that a
      majority in principal amount of the Outstanding Debt Securities of a given
      series may rescind and annul a declaration of acceleration with respect to
      Debt Securities of such series as provided in Section 5.2.

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

      Section 5.14. Undertaking for costs.

      All parties to this Indenture agree, and each Holder of any Debt Security
or any Coupon by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit other than the Trustee of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant, but the provisions of this Section shall
not apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in the
aggregate more than 10% in principal amount of the Outstanding Debt Securities
of any series, or to any suit instituted by any Holder of a Debt Security or
Coupon for the enforcement of the payment of the principal of (or premium, if
any) or interest on such Debt Security or the payment of any Coupon on or after
the respective Stated Maturity or Maturities expressed in such Debt Security or
Coupon (or, in the case of redemption, on or after the Redemption Date).

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<PAGE>

      Section 5.15. Waiver of stay or extension laws.

      The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                                  ARTICLE VI.

                                  THE TRUSTEE

      Section 6.1. Certain duties and responsibilities.

      (a) Except during the continuance of an Event of Default with respect to
the Debt Securities of any series:

            (1) the Trustee undertakes to perform such duties and only such
      duties as are specifically set forth in this Indenture, and no implied
      covenants or obligations shall be read into this Indenture against the
      Trustee; and

            (2) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture; but
      in the case of any such certificates or opinions which by any provisions
      hereof are specifically required to be furnished to the Trustee, the
      Trustee shall be under a duty to examine the same to determine whether or
      not they conform to the requirements of this Indenture (but need not
      confirm or investigate the accuracy of mathematical calculations or other
      facts stated therein).

      (b) In case an Event of Default with respect to Debt Securities of any
series has occurred and is continuing, the Trustee shall, with respect to the
Debt Securities of such series, exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.

      (c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:

            (1) this subsection shall not be construed to limit the effect of
      subsection (a) of this Section 6.1;

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<PAGE>

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

            (3) the Trustee shall not be liable with respect to any action
      taken, suffered or omitted to be taken by it with respect to Debt
      Securities of any series in good faith in accordance with the direction of
      the Holders of a majority in principal amount of the Outstanding Debt
      Securities of such series relating to the time, method and place of
      conducting any proceeding for any remedy available to the Trustee, or
      exercising any trust or power conferred upon the Trustee, under this
      Indenture;

            (4) the Trustee is under no obligation or duty to pay interest on or
      invest any funds deposited with it except as specifically provided in this
      Indenture, and all investment activities undertaken by the Trustee, if
      any, shall be at and pursuant to the written instruction of the Company;
      and

            (5) the Trustee shall not be required to expend or risk its own
      funds or otherwise incur any financial liability in the performance of any
      of its duties hereunder, or in the exercise of any of its rights or
      powers, if it shall have reasonable grounds for believing that repayment
      of such funds or adequate indemnity against such risk or liability is not
      reasonably assured to it.

      (d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

      (e) Any opinion required or permitted to be delivered to the Trustee
hereunder may be addressed and delivered to the entity serving as Trustee
hereunder solely in its individual capacity and not in its capacity as Trustee,
fiduciary or as representative of the holders of such Debt Securities and
Coupons issued by the Company.

      Section 6.2. Notice of defaults.

      Within 90 days after the occurrence of any default hereunder with respect
to Debt Securities or Coupons, if any, of any series, the Trustee shall give
notice to all Holders of Debt Securities and Coupons of such series of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security or Coupon of such series or in the payment of any sinking fund
installment with respect to Debt Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Debt Securities and of Coupons of
such series; and provided, further, that in the case of any default of the
character specified in Section 5.1(4) with respect to Debt Securities of such
series no such notice to Holders shall be given until at least 90 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event

                                       53
<PAGE>

which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Debt Securities of such series.

      Notice given pursuant to this Section 6.2 shall be transmitted by mail:

            (1) to all Registered Holders, as the names and addresses of the
      Registered Holders appear in the Security Register;

            (2) to such Holders of Bearer Securities of any series as have
      within two years preceding such transmission, filed their names and
      addresses with the Trustee for such series for that purpose; and

            (3) to each Holder of a Debt Security of any series whose name and
      address appear in the information preserved at the time by the Trustee in
      accordance with Section 7.2(a) of this Indenture.

      Section 6.3. Certain rights of Trustee.

      Except as otherwise provided in Section 6.1:

      (a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;

      (b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;

      (c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;

      (d) the Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;

      (e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders of Debt Securities of any series pursuant to this Indenture, unless
such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;

      (f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, Officers' Certificate or other
certificate, statement, instrument, opinion,

                                       54
<PAGE>

report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, unless requested in writing
to do so by not less than a majority of the Holders of the Outstanding Debt
Securities affected thereby, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to conduct a reasonable examination of the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation;

      (g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent (including any agent appointed pursuant to
Section 3.10(j)) or attorney appointed with due care by it hereunder;

      (h) the Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Debt Securities and this Indenture;

      (i) the rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder;
and

      (j) the Trustee may request that the Company deliver a certificate setting
forth the names of individuals and/or titles of officers authorized at such time
to take specified actions pursuant to this Indenture.

      Section 6.4. Not responsible for recitals or issuance of Debt Securities.

      The recitals contained herein and in the Debt Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debt Securities or Coupons, if any, of any series. The
Trustee shall not be accountable for the use or application by the Company of
any Debt Securities or the proceeds thereof.

      Section 6.5. May hold Debt Securities.

      The Trustee, any Paying Agent, the Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Debt Securities or Coupons, and, subject to Sections 6.8 and 6.13,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar or such other agent.

                                       55
<PAGE>

      Section 6.6. Money held in trust.

      Money in any Currency held by the Trustee or any Paying Agent in trust
hereunder need not be segregated from other funds except to the extent required
by law. Neither the Trustee nor any Paying Agent shall be under any liability
for (i) interest on any money received by it hereunder except as otherwise
agreed with the Company or (ii) losses resulting from currency fluctuations or
any investments made pursuant to 6.1(c)(4).

      Section 6.7. Compensation and reimbursement.

      The Company agrees:

            (1) to pay to the Trustee from time to time such reasonable
      compensation in Dollars as the Company and the Trustee shall from time to
      time agree in writing for all services rendered by it hereunder (which
      compensation shall not be limited by any provision of law in regard to the
      compensation of a trustee of an express trust);

            (2) except as otherwise expressly provided herein, to reimburse the
      trustee in Dollars upon its request for all reasonable expenses,
      disbursements and advances incurred or made by the Trustee in accordance
      with any provision of this Indenture (including the reasonable
      compensation and the expenses and disbursements of its agents and
      counsel), except to the extent of any such expense, disbursement or
      advance as may be attributable to its negligence, bad faith or willful
      misconduct; and

            (3) to indemnify in Dollars the Trustee for, and to hold it harmless
      against, any loss, liability, damage, claim or expense incurred without
      negligence or bad faith or willful misconduct on its part, arising out of
      or in connection with the acceptance or administration of this trust or
      performance of its duties hereunder, including the reasonable costs and
      expenses of defending itself against any claim or liability in connection
      with the exercise or performance of any of its powers or duties hereunder,
      except to the extent that any such claim or liability may be attributable
      to the Trustee's negligence, bad faith or willful misconduct.

      As consideration for the performance of the obligations of the Company
under this Section, the Trustee shall have a claim senior to the Debt Securities
and Coupons, if any, upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of amounts due on
particular Debt Securities and Coupons.

      The obligations of the Company under this Section 6.7 to compensate and
indemnify the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness under this Indenture and shall survive the satisfaction
and discharge of this Indenture.

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<PAGE>

      Section 6.8. Disqualification; conflicting interests.

      If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

      Section 6.9. Corporate Trustee required; eligibility.

      There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, subject to supervision or examination by Federal, State
or District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Company nor any Person directly or
indirectly controlling, controlled by, or under common control with the Company
shall serve as Trustee upon any Debt Securities.

      Section 6.10. Resignation and removal; appointment of successor.

      (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.

      (b) The Trustee may resign at any time with respect to the Debt Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may, at the expense of the Company, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Debt Securities of such series.

      (c) The Trustee may be removed at any time with respect to the Debt
Securities of any series and a successor Trustee appointed by Act of the Holders
of a majority in principal amount of the Outstanding Debt Securities of such
series, delivered to the Trustee and to the Company.

      (d) If at any time:

            (1) the Trustee shall fail to comply with Section 6.8(a) with
      respect to the Debt Securities of any series after written request
      therefor by the Company or by any Holder who has been a bona fide Holder
      of a Debt Security of such series for at least six months, or

            (2) the Trustee shall cease to be eligible under Section 6.9 with
      respect to the Debt Securities of any series and shall fail to resign
      after written request therefor by the Company or by any such Holder, or

                                       57
<PAGE>

            (3) the Trustee shall become incapable of acting or shall be
      adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
      property shall be appointed or any public officer shall take charge or
      control of the Trustee or of its property or affairs for the purpose of
      rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Debt Securities, or (ii) subject to Section 5.14,
any Holder who has been a bona fide Holder of a Debt Security of any series for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee for the Debt Securities of such series.

      (e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Debt Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Debt Securities of that or those series (except as provided in Section
6.10(c)) (it being understood that any such successor Trustee may be appointed
with respect to the Debt Securities of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Debt
Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Debt Securities of any series shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Debt Securities
of such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Debt Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Debt Securities of any series shall
have been so appointed by the Company or the Holders of such series and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Debt Security of such series for at least six months may, at
the expense of the Company and subject to Section 5.14, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Debt Securities of
such series.

      (f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Debt Securities of any series and each
appointment of a successor Trustee with respect to the Debt Securities of any
series in the manner and to the extent provided in Section 1.5 to the Holders of
Debt Securities of such series. Each notice shall include the name of the
successor Trustee with respect to the Debt Securities of such series and the
address of its Corporate Trust Office.

      Section 6.11. Acceptance of appointment by successor.

      (a) In the case of an appointment hereunder of a successor Trustee with
respect to all Debt Securities, each such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee, but, on request of
the Company or the

                                       58
<PAGE>

successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its claim, if any,
provided for in Section 6.7.

      (b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Debt
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Debt Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debt Securities of that or those
series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in any such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any other trust or trusts hereunder administered by any other such Trustee; and
upon the execution and delivery of any such supplemental indenture the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debt Securities of that
or those series to which the appointment of such successor Trustee relates, but,
on request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Debt
Securities of that or those series to which the appointment of such successor
Trustee relates.

      (c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section 6.11, as the case may be.

      (d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article VI.

      Section 6.12. Merger, conversion, consolidation or succession to business.

      Any corporation or national association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
national association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation or national association
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such

                                       59
<PAGE>

corporation or national association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Debt
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Debt
Securities so authenticated with the same effect as if such successor Trustee
had itself authenticated such Debt Securities. In case any Debt Securities shall
not have been authenticated by such predecessor Trustee, any such successor
Trustee may authenticate and deliver such Debt Securities, in either its own
name or that of its predecessor Trustee, with the full force and effect which
this Indenture provides for the certificate of authentication of the Trustee.

      Section 6.13. Preferential collection of claims against Company.

      If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Debt Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

      Section 6.14. Appointment of Authenticating Agent.

      As long as any Debt Securities of a series remain Outstanding, upon a
Company Request, there shall be an authenticating agent (the "Authenticating
Agent") appointed, for such period as the Company shall elect, by the Trustee
for such series of Debt Securities to act as its agent on its behalf and subject
to its direction in connection with the authentication and delivery of each
series of Debt Securities for which it is serving as Trustee. Debt Securities of
each such series authenticated by such Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by such Trustee. Wherever reference is made in this
Indenture to the authentication and delivery of Debt Securities of any series by
the Trustee for such series or to the Trustee's Certificate of Authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee for such series by an Authenticating Agent for such series and a
Certificate of Authentication executed on behalf of such Trustee by such
Authenticating Agent, except that only the Trustee may authenticate Debt
Securities upon original issuance and pursuant to Section 3.6 hereof. Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or of any State,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $10,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for purposes of
this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.

      Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or

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consolidation to which any Authenticating Agent shall be a party, or any
corporation succeeding to all or substantially all of the corporate agency
business of any Authenticating Agent, shall continue to be the Authenticating
Agent with respect to all series of Debt Securities for which it served as
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee for such series or such Authenticating Agent.

      The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Company in the manner set forth in Section 1.4. Any Authenticating Agent may at
any time, and if it shall cease to be eligible shall, resign by giving written
notice of resignation to the applicable Trustee and to the Company.

      Upon receiving such a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.14 with respect to one or more
or all series of Debt Securities, the Trustee for such series shall upon Company
Request appoint a successor Authenticating Agent, and the Company shall provide
notice of such appointment to all Holders of Debt Securities of such series in
the manner and to the extent provided in Section 1.5. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent
herein. The Company agrees to pay to the Authenticating Agent for such series
from time to time reasonable compensation for its services. The Authenticating
Agent for the Debt Securities of any series shall have no responsibility or
liability for any action taken by it as such at the direction of the Trustee for
such series.

      If an appointment with respect to one or more series is made pursuant to
this Section, the Debt Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

      This is one of the series of Debt Securities referred to in the within
mentioned Indenture.

                                       As Trustee

                                       By:______________________________________
                                          As Authenticating Agent

                                       By:______________________________________
                                          Authorized Signatory

                                  ARTICLE VII.

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

      Section 7.1. Company to furnish Trustee names and addresses of Holders.

      If the Trustee is not acting as Security Registrar for the Registered
Securities of such series for which it acts as Trustee, the Company will furnish
or cause to be furnished to the Trustee:

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<PAGE>

      (a) semi-annually on a date not more than 15 days after each Regular
Record Date with respect to an Interest Payment Date, if any, for the Registered
Securities of such series (or on semi-annual dates in each year to be determined
pursuant to Section 3.1 if the Registered Securities of such series do not bear
interest), a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Registered Holders as of the date 15 days next
preceding each such Regular Record Date (or such semi-annual dates, as the case
may be); and

      (b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished.

      The Company shall also be required to furnish to the Trustee at all such
times set forth above all information in the possession or control of the
Company or any of its Paying Agents other than the Trustee as to the names and
addresses of the Holders of Bearer Securities of all series; provided, however,
that the Company shall have no obligation to investigate any matter relating to
any Holders of Bearer Securities of any series.

      Section 7.2. Preservation of information, communication to Holders.

      (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of Holders (i)
contained in the most recent list furnished to the Trustee as provided in
Section 7.1, (ii) received by it in the capacity of Security Registrar (if so
acting) hereunder, and (iii) filed with it within the two preceding years
pursuant to Section 313(c)(2) of the Trust Indenture Act.

      The Trustee may (i) destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished, (ii) destroy any
information received by it as Paying Agent (if so acting) hereunder upon
delivering to itself as Trustee, not earlier than 45 days after an Interest
Payment Date, a list containing the names and addresses of the Holders obtained
from such information since the delivery of the next previous list, if any,
(iii) destroy any list delivered to itself as Trustee which was compiled from
information received by it as Paying Agent (if so acting) hereunder upon the
receipt of a new list so delivered, and (iv) destroy not earlier than two years
after filing, any information filed with it pursuant to Section 313(c)(2) of the
Trust Indenture Act.

      (b) The rights of Holders to communicate with other Holders with respect
to their rights under the Indenture or under the Debt Securities, and the
corresponding rights and privileges of the Trustee shall be as provided by
Section 312(b) of the Trust Indenture Act.

      (c) Every Holder of Debt Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders in accordance with Section 7.2(b),
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing of any material
pursuant to a request made under Section 7.2(b).

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<PAGE>

      Section 7.3. Reports by Trustee.

      (a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each January 15 following the date of the initial issuance of
Securities under this Indenture deliver to Holders a brief report, dated as of
such January 15, which complies with the provisions of such Section 313(a).

      (b) A copy of each such report shall, at the time of such transmission to
Holders, be filed with the Company and the Company shall file such report with
each stock exchange, if any, upon which any Debt Securities of such series are
listed, with the Commission and also with the Company. The Company will promptly
notify the Trustee in writing when any series of Debt Securities are listed on
any stock exchange and of any delisting thereof.

      Section 7.4. Reports by Company.

      Unless otherwise specified with respect to a particular series of Debt
Securities pursuant to Section 3.1, the Company will:

            (1) file with the Trustee, after the Company is required to file the
      same with the Commission, copies of the annual reports and of the
      information, documents and other reports (or copies of such portions of
      any of the foregoing as the Commission may from time to time by rules and
      regulations prescribe) which the Company may be required to file with the
      Commission pursuant to Section 13 or Section 15(d) of the Securities
      Exchange Act of 1934, as amended. Notwithstanding that the Company may not
      be required to remain subject to the reporting requirements of Section 13
      or 15(d) of the Securities Exchange Act of 1934, as amended, or otherwise
      report on an annual and quarterly basis on forms provided for such annual
      and quarterly reporting pursuant to rules and regulations promulgated by
      the Commission, the Company shall continue to file with the Commission and
      provide the Trustee and the Holders of each series of Debt Securities
      with, without cost to each Holder, (a) within 90 days after the end of
      each fiscal year, annual reports on Form 10-K (or any successor or
      comparable form) containing the information required to be contained
      therein (or required in such successor or comparable form); (b) within 45
      days after the end of each of the first three fiscal quarters of each
      fiscal year, reports on Form 10-Q (or any successor or comparable form);
      and (c) promptly from time to time after the occurrence of an event
      required to be therein reported, such other reports on Form 8-K (or any
      successor or comparable form) containing the information required to be
      contained therein (or required in any successor or comparable form);
      provided, however, that the Company shall not be obligated to file such
      reports with the Commission if the Commission does not permit such
      filings;

            (2) file with the Trustee and the Commission, in accordance with
      rules and regulations prescribed from time to time by the Commission, such
      additional information, documents and reports with respect to compliance
      by the Company

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<PAGE>

      with the conditions and covenants of this Indenture as may be required
      from time to time by such rules and regulations; and

            (3) transmit to all Holders of Debt Securities, in the manner and to
      the extent provided in Section 7.3, within 30 days after the filing
      thereof with the Trustee, such summaries of any information, documents and
      reports required to be filed by the Company pursuant to paragraphs (1) and
      (2) of this Section as may be required by rules and regulations prescribed
      from time to time by the Commission.

Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of same shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

                                 ARTICLE VIII.

                             CONCERNING THE HOLDERS

      Section 8.1. Acts of Holders.

      Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent or proxy duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Whenever in this Indenture it is provided that
the Holders of a specified percentage in aggregate principal amount of the
Outstanding Debt Securities of any series may take any Act, the fact that the
Holders of such specified percentage have joined therein may be evidenced (a) by
the instrument or instruments executed by Holders in person or by agent or proxy
appointed in writing, or (b) by the record of Holders voting in favor thereof at
any meeting of such Holders duly called and held in accordance with the
provisions of Article IX, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Holders.

      The Company may, at its option, by Company Order, fix in advance a record
date for the determination of Holders of Registered Debt Securities entitled to
give any request, demand, authorization, direction, notice, consent, waiver or
other Act solicited by the Company, but the Company shall have no obligation to
do so; provided, however, that the Company may not fix a record date for the
giving or making of any notice, declaration, request or direction referred to in
the next sentence. In addition, the Trustee may, at its option, fix in advance a
record date of the determination of Holders of Registered Debt Securities
entitled to join in the giving or making of any Notice of Default, any
declaration of acceleration referred to in Section 5.2, any request to institute
proceedings referred to in Section 5.7 or any direction referred to in Section
5.12. If any

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<PAGE>

such record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act, or such notice, declaration, request or
direction, may be given before or after such record date, but only the Holders
of Registered Debt Securities for the purposes of determining (i) whether
Holders of the requisite proportion of the Outstanding Debt Securities have
authorized or agreed or consented to such Act (and for that purpose, the
Outstanding Registered Debt Securities shall be computed as of the record date)
and/or (ii) which Holders of Registered Debt Securities may revoke any such Act
(notwithstanding Section 8.4); and any such Act, given as aforesaid, shall be
effective whether or not the Holders of Registered Debt Securities which
authorized or agreed or consented to such Act remain Holders of Registered Debt
Securities after such record date and whether or not the Debt Securities held by
such Holders remain Outstanding after such record date.

      Section 8.2. Proof of ownership; proof of execution of instruments by
Holder.

      The ownership of Registered Securities of any series shall be proved by
the Security Register for such series or by a certificate of the Security
Registrar for such series.

      The ownership of Bearer Securities shall be proved by production of such
Bearer Securities or by a certificate executed by any bank or trust company,
which certificate shall be dated and shall state that on the date thereof a
Bearer Security bearing a specified identifying number or other mark was
deposited with or exhibited to the Person executing such certificate by the
Person named in such certificate, or by any other proof of possession reasonably
satisfactory to the Trustee. The holding by the Person named in any such
certificate of any Bearer Security specified therein shall be presumed to
continue for a period of one year unless at the time of determination of such
holding (1) another certificate bearing a later date issued in respect of the
same Bearer Security shall be produced, (2) such Bearer Security shall be
produced by some other Person, (3) such Bearer Security shall have been
registered on the Security Register, if, pursuant to Section 3.1, such Bearer
Security can be so registered, or (4) such Bearer Security shall have been
canceled or paid.

      Subject to the provisions of Sections 6.1, 6.3 and 9.5, proof of the
execution of a writing appointing an agent or proxy and of the execution of any
instrument by a Holder or his agent or proxy shall be sufficient and conclusive
in favor of the Trustee and the Company if made in the following manner:

      The fact and date of the execution by any such Person of any instrument
may be proved by the certificate of any notary public or other officer
authorized to take acknowledgements of deeds, that the person executing such
instrument acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution sworn to before any such notary or other such officer.
Where such execution is by an officer of a Corporation or a member of a
partnership on behalf of such Corporation, as the case may be, or by any other
person acting in a representative capacity, such certificate or affidavit shall
also constitute sufficient proof of his or her authority.

      The record of any Holders' meeting shall be proved in the manner provided
in Section 9.6.

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<PAGE>

      The Trustee may in any instance require further or other proof with
respect to any of the matters referred to in this Section 8.2 so long as the
request is a reasonable one.

      Section 8.3. Persons deemed owners.

      The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of the
principal of (and premium, if any) and (subject to Section 3.7) interest, if
any, on such Registered Security and for all other purposes whatsoever, whether
or not such Registered Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary. The Company, the Trustee, and any agent of the Company or the Trustee
may treat the Holder of any Bearer Security or of any Coupon as the absolute
owner of such Bearer Security or Coupon for the purposes of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Bearer Security or Coupon be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary. All payments made to any Holder, or upon his order, shall be
valid, and, to the extent of the sum or sums paid, effectual to satisfy and
discharge the liability for moneys payable upon such Debt Security or Coupon.

      Section 8.4. Revocation of consents; future Holders bound.

      At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.1, of the taking of any Act by the Holders of the
percentage in aggregate principal amount of the Outstanding Debt Securities
specified in this Indenture in connection with such Act, any Holder of a Debt
Security the number, letter or other distinguishing symbol of which is shown by
the evidence to be included in such Debt Securities, the Holders of which have
consented to such Act, by filing written notice with the Trustee at the
Corporate Trust Office and upon proof of ownership as provided in Section 8.2,
may revoke such Act so far as it concerns such Debt Security. Except as
aforesaid, any such Act taken by the Holder of any Debt Security shall be
conclusive and binding upon such Holder and, subject to the provisions of
Section 5.8, upon all future Holders of such Debt Security and all past, present
and future Holders of Coupons, if any, appertaining thereto and of any Debt
Securities and Coupons issued on transfer or in lieu thereof or in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Debt Security or Coupons or such other Debt Securities
or Coupons.

                                  ARTICLE IX.

                               HOLDERS' MEETINGS

      Section 9.1. Purposes of meetings.

      A meeting of Holders of any or all series may be called at any time and
from time to time pursuant to the provisions of this Article IX for any of the
following purposes:

            (1) to give any notice to the Company or to the Trustee for such
      series, or to give any directions to the Trustee for such series, or to
      consent to the

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<PAGE>

      waiving of any default hereunder and its consequences, or to take any
      other action authorized to be taken by Holders pursuant to any of the
      provisions of Article V;

            (2) to remove the Trustee for such series and appoint a successor
      Trustee pursuant to the provisions of Article VI;

            (3) to consent to the execution of an indenture or indentures
      supplemental hereto pursuant to the provisions of Section 11.2; or

            (4) to take any other action authorized to be taken by or on behalf
      of the Holders of any specified aggregate principal amount of the
      Outstanding Debt Securities of any one or more or all series, as the case
      may be, under any other provision of this Indenture or under applicable
      law.

      Section 9.2. Call of meetings by Trustee.

      The Trustee for any series may at any time call a meeting of Holders of
such series to take any action specified in Section 9.1, to be held at such time
or times and at such place or places as the Trustee for such series shall
determine. Notice of every meeting of the Holders of any series, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given to Holders of such series in the
manner and to the extent provided in Section 1.5. Such notice shall be given not
less than 10 days nor more than 90 days prior to the date fixed for the meeting.

      Section 9.3. Call of meetings by Company or Holders.

      In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in aggregate principal amount of the Outstanding Debt
Securities of a series or of all series, as the case may be, shall have
requested the Trustee for such series to call a meeting of Holders of any or all
such series by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have given the
notice of such meeting within 10 days after the receipt of such request, then
the Company or such Holders may determine the time or times and the place or
places for such meetings and may call such meetings to take any action
authorized in Section 9.1, by giving notice thereof as provided in Section 9.2.

      Section 9.4. Qualifications for voting.

      To be entitled to vote at any meeting of Holders a Person shall be (a) a
Holder of a Debt Security of the series with respect to which such meeting is
being held or (b) a Person appointed by an instrument in writing as agent or
proxy by such Holder. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee for the series
with respect to which such meeting is being held and its counsel and any
representatives of the Company and its counsel.

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<PAGE>

      Section 9.5. Regulations.

      Notwithstanding any other provisions of this Indenture, the Trustee for
any series may make such reasonable regulations as it may deem advisable for any
meeting of Holders of such series, in regard to proof of the holding of Debt
Securities of such series and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate.

      The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of such series as provided in Section 9.3, in which case
the Company or the Holders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by a majority vote of the meeting.

      Subject to the provisos in the definition of "Outstanding," at any meeting
each Holder of a Debt Security of the series with respect to which such meeting
is being held or proxy therefor shall be entitled to one vote for each $1,000
principal amount (or such other amount as shall be specified as contemplated by
Section 3.1) of Debt Securities of such series held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Debt Security challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting shall
have no right to vote other than by virtue of Outstanding Debt Securities of
such series held by him or her or instruments in writing duly designating him or
her as the person to vote on behalf of Holders of Debt Securities of such
series. Any meeting of Holders with respect to which a meeting was duly called
pursuant to the provisions of Section 9.2 or 9.3 may be adjourned from time to
time by a majority of such Holders present and the meeting may be held as so
adjourned without further notice.

      Section 9.6. Voting.

      The vote upon any resolution submitted to any meeting of Holders with
respect to which such meeting is being held shall be by written ballots on which
shall be subscribed the signatures of such Holders or of their representatives
by proxy and the serial number or numbers of the Debt Securities held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Holders shall be
taken, and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was transmitted as provided in Section
9.2. The record shall show the serial numbers of the Debt Securities voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting, and one
of the duplicates shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee.

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<PAGE>

      Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

                                   ARTICLE X.

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

      Section 10.1. Company may consolidate, etc., only on certain terms

      The Company shall not consolidate with or merge with or into (whether or
not the Company is the surviving corporation) or sell, assign, convey, transfer
or lease its properties and assets substantially as an entirety to any Person,
unless:

            (1) the Corporation formed by such consolidation or into which the
      Company is merged or the Person which acquires by conveyance or transfer,
      or which leases, the properties and assets of the Company substantially as
      an entirety (the "successor corporation") shall be a Corporation organized
      and existing under the laws of the United States or any State or territory
      thereof or the District of Columbia and shall expressly assume, by an
      indenture supplemental hereto, executed and delivered to the Trustee, in
      form satisfactory to the Trustee, the due and punctual payment of the
      principal of (and premium, if any) and interest on all the Debt Securities
      and Coupons, if any, and the performance of every covenant of this
      Indenture on the part of the Company to be performed or observed,
      including providing for conversion or exchange rights in accordance with
      the terms of the Debt Securities;

            (2) immediately after giving effect to such transaction, no Event of
      Default, and no event which, after notice or lapse of time, or both, would
      become an Event of Default, shall have happened and be continuing;

            (3) the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel each stating that such
      consolidation, merger, conveyance, transfer or lease and such supplemental
      indenture, if any, comply with this Article and that all conditions
      precedent herein provided for relating to such transaction have been
      complied with; and

            (4) such other conditions as may be specified under Section 3.1 with
      respect to any series of Debt Securities have been complied with.

      Section 10.2. Successor Corporation substituted.

      Upon any consolidation with or merger into any other Corporation, or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety, the successor corporation formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor corporation had been named as the Company
herein, and thereafter the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Debt Securities.

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<PAGE>

                                  ARTICLE XI.

                            SUPPLEMENTAL INDENTURES

      Section 11.1. Supplemental indentures without consent of Holders.

      Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee for the Debt Securities of any series, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:

            (1) to evidence the succession of another Corporation to the rights
      of the Company and the assumption by such successor of the covenants,
      agreements and obligations of the Company contained herein and in the Debt
      Securities and Coupons, if any; or

            (2) to add to the covenants of the Company, for the benefit of the
      Holders of all or any series of Debt Securities and the Coupons, if any,
      appertaining thereto (and if such covenants are to be for the benefit of
      less than all series, stating that such covenants are expressly being
      included solely for the benefit of such series), or to surrender any right
      or power herein conferred upon the Company; or

            (3) to add any additional Events of Default (and if such Events of
      Default are to be applicable to less than all series, stating that such
      Events of Default are expressly being included solely to be applicable to
      such series); or

            (4) to add or change any of the provisions of this Indenture to such
      extent as shall be necessary to permit or facilitate the issuance of Debt
      Securities of any series in bearer form, registrable or not registrable,
      and with or without Coupons, to permit Bearer Securities to be issued in
      exchange for Registered Securities, to permit Bearer Securities to be
      issued in exchange for Bearer Securities of other authorized denominations
      or to permit the issuance of Debt Securities of any series in
      uncertificated form, provided that any such action shall not adversely
      affect the interests of the Holders of Debt Securities of any series or
      any related Coupons in any material respect; or

            (5) to change or eliminate any of the provisions of this Indenture,
      provided that any such change or elimination shall become effective only
      when there is no Outstanding Debt Security or Coupon of any series created
      prior to the execution of such supplemental indenture which is entitled to
      the benefit of such provision and as to which such supplemental indenture
      would apply; or

            (6) to secure the Debt Securities or to provide that any of the
      Company's obligations under any series of the Debt Securities shall be
      guaranteed and the terms and conditions for the release or substitution of
      such security or guarantee; or

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<PAGE>

            (7) to supplement any of the provisions of this Indenture to such
      extent as shall be necessary to permit or facilitate the defeasance and
      discharge of any series of Securities pursuant to Article IV or XV,
      provided that any such action shall not adversely affect the interests of
      the Holders of Debt Securities of such series or any other series of Debt
      Securities or any related Coupons in any material respect; or

            (8) to establish the form or terms of Debt Securities and Coupons,
      if any, of any series as permitted by Sections 2.1 and 3.1, including
      providing for conversion or other rights as contemplated by Section 3.1;
      or

            (9) to evidence and provide for the acceptance of appointment
      hereunder by a successor Trustee with respect to one or more series of
      Debt Securities and to add to or change any of the provisions of this
      Indenture as shall be necessary to provide for or facilitate the
      administration of the trusts hereunder by more than one Trustee, pursuant
      to the requirements of Sections 6.10 or 6.11; or

            (10) to modify the provisions of Article XVIII (except with respect
      to any Outstanding Debt Securities, to the extent prohibited by clause (5)
      of Section 11.2;

            (11) to cure any ambiguity, or to correct or supplement any
      provision herein or in any supplemental indenture that may be defective or
      inconsistent with any other provision herein, to eliminate any conflict
      between the terms hereof and the Trust Indenture Act or to make any other
      provisions with respect to matters or questions arising under this
      Indenture which shall not be inconsistent with any provision of this
      Indenture; provided such other provisions shall not adversely affect the
      interests of the Holders of Outstanding Debt Securities or Coupons, if
      any, of any series created prior to the execution of such supplemental
      indenture in any material respect; or

            (12) to change conversion rights in accordance with Section 16.4.

      Section 11.2. Supplemental indentures with consent of Holders.

      With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of each series affected by
such supplemental indenture voting separately, by Act of said Holders delivered
to the Company and the Trustee for such series of Debt Securities, the Company,
when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture of such Debt Securities and Coupons, if any; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Debt Security of each such series affected thereby,

            (1) conflict with the required provisions of the Trust Indenture
      Act;

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            (2) except as specifically provided with respect to any series of
      Debt Securities pursuant to Section 3.1, (a) change the Stated Maturity of
      the principal of, or installment of interest, if any, on, any Debt
      Security, or (b) reduce the principal amount thereof or the interest
      thereon or any premium payable upon redemption thereof (provided that a
      requirement to offer to repurchase Debt Securities shall not be deemed a
      redemption for this purpose), or (c) change the Stated Maturity of or
      reduce the amount of any payment to be made with respect to any Coupon, or
      (d) change the Currency or Currencies in which the principal of (and
      premium, if any) or interest on such Debt Security is denominated or
      payable except as contemplated by Section 3.10, or (e) reduce the amount
      of the principal of a Discount Security that would be due and payable upon
      a declaration of acceleration of the Maturity thereof pursuant to Section
      5.2, or (f) reduce the amount of, or postpone the date fixed for, any
      payment under any sinking fund or analogous provisions for any Debt
      Security, or (g) impair the right to institute suit for the enforcement of
      any payment on or after the Stated Maturity thereof (or, in the case of
      redemption, on or after the Redemption Date), or (h) limit the obligation
      of the Company to maintain a paying agency outside the United States for
      payment on Bearer Securities as provided in Section 12.3, or (i) adversely
      affect the right to convert any Debt Security into shares of Common Stock
      of the Company as may be provided pursuant to Section 3.1;

            (3) reduce the percentage in principal amount of the Outstanding
      Debt Securities of any series, the consent of whose Holders is required
      for any supplemental indenture, or the consent of whose Holders is
      required for any waiver of compliance with certain provisions of this
      Indenture or certain defaults hereunder and their consequences provided
      for in this Indenture;

            (4) modify any of the provisions of this Section 11.2, Section 5.13
      or Section 12.7, except to increase any such percentage or to provide that
      certain other provisions of this Indenture cannot be modified or waived
      without the consent of the Holder of each Outstanding Debt Security of
      each series affected thereby; provided, however, that this clause shall
      not be deemed to require the consent of any Holder with respect to changes
      in the references to "the Trustee" and concomitant changes in this Section
      11.2 and Section 12.7, or the deletion of this proviso, in accordance with
      the requirements of Sections 6.10, 6.11 and 11.1(9); or

            (5) modify the provisions of this Indenture with respect to the
      subordination of the Outstanding Debt Securities of any series in a manner
      adverse to the Holders thereof.

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

      A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture with respect to one or more particular series of
Debt Securities and Coupons, if

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any, or which modifies the rights of the Holders of Debt Securities and Coupons
of such series with respect to such covenant or other provision, shall be deemed
not to affect the rights under this Indenture of the Holders of Debt securities
and Coupons, if any, of any other series.

      Section 11.3. Execution of supplemental indentures.

      In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article XI or the modifications thereby
of the trusts created by this Indenture, the Trustee shall receive, and (subject
to Section 6.1) shall be fully protected in conclusively relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture and
that the supplemental indenture conforms to the requirements of the Trust
Indenture Act as then in effect. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which adversely affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise in a material
way.

      Section 11.4. Effect of supplemental indentures.

      Upon the execution of any supplemental indenture under this Article XI ,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debt Securities and Coupons theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.

      Section 11.5. Conformity with Trust Indenture Act.

      Every supplemental indenture executed pursuant to this Article XI shall
conform to the requirements of the Trust Indenture Act as then in effect.

      Section 11.6. Reference in Debt Securities to supplemental indentures.

      Debt Securities and Coupons, if any, of any series authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article XI may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debt Securities and Coupons of
any series so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Debt Securities and Coupons of such series.

      Section 11.7. Notice of supplemental indenture.

      Promptly after the execution by the Company and the appropriate Trustee of
any supplemental indenture pursuant to Section 11.2, the Company shall transmit,
in the manner and to the extent provided in Section 1.5, to all Holders of any
series of the Debt Securities affected thereby, a notice setting forth in
general terms the substance of such supplemental indenture; provided that
failure to transmit any such notice or any defect therein shall not affect the
validity of such supplemental indenture.

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                                  ARTICLE XII.

                                   COVENANTS

      Section 12.1. Payment of principal, premium and interest.

      The Company covenants and agrees for the benefit of each series of Debt
Securities and Coupons, if any, that it will duly and punctually pay the
principal of (and premium, if any) and interest on the Debt Securities in
accordance with the terms of the Debt Securities, the Coupons and this
Indenture. Unless otherwise specified as contemplated by Section 3.1 with
respect to any series of Debt Securities or except as otherwise provided in
Section 3.6, any interest due on Bearer Securities on or before Maturity shall
be payable only upon presentation and surrender of the several Coupons for such
interest installments as are evidenced thereby as they severally mature. If so
provided in the terms of any series of Debt Securities established as provided
in Section 3.1, the interest, if any, due in respect of any temporary Global
Note or Permanent Global Note, together with any additional amounts payable in
respect thereof, as provided in the terms and conditions of such Debt Security,
shall be payable only upon presentation of such Debt Security to the Trustee for
notation thereon of the payment of such interest.

      Section 12.2. Officer's certificate as to default.

      Unless otherwise specifically provided for with respect to any series of
Debt Securities under Section 3.1, the Company will deliver to the Trustee, on
or before a date not more than four months after the end of each fiscal year of
the Company (which on the date hereof is the year ending March 31) ending after
the date hereof, a certificate of the principal executive officer, principal
financial officer or principal accounting officer of the Company stating whether
or not to the best knowledge of the signer thereof the Company is in compliance
with all covenants and conditions under this Indenture, and, if the Company
shall be in default, specifying all such defaults and the nature thereof of
which such signer may have knowledge. For purposes of this Section, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.

      Section 12.3. Maintenance of office or agency.

      If Debt Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for such series an office or
agency where Debt Securities of that series may be presented or surrendered for
payment, where Debt Securities of that series may be surrendered for
registration of transfer or exchange, where Debt Securities of that series that
are convertible may be surrendered for conversion, if applicable, and where
notices and demands to or upon the Company in respect of the Debt Securities of
that series and this Indenture may be served. If Debt Securities of a series are
issuable as Bearer Securities, the Company will maintain (A) in the Borough of
Manhattan, The City and State of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Debt Securities of that series may be
surrendered for exchange or where Registered Securities of such series may be
surrendered for redemption, where notices and demands to or upon the Company in
respect of the Debt Securities of that series and this

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<PAGE>

Indenture may be served and where Bearer Securities of that series and related
Coupons may be presented or surrendered for payment in the circumstances
described in the following paragraph (and not otherwise), (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Debt
Securities of that series and related Coupons may be presented and surrendered
for payment (including payment of any additional amounts payable on Debt
Securities of that series, if so provided pursuant to Section 3.1); provided,
however, that if the Debt Securities of that series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg Stock
Exchange or any other stock exchange located outside the United States and such
stock exchange shall so require, the Company will maintain a Paying Agent for
the Debt Securities of that series in London, Luxembourg or any other required
city located outside the United States, as the case may be, so long as the Debt
Securities of that series are listed on such exchange, and (C) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
located outside the United States an office or agency where any Registered
Securities of that series may be surrendered for registration of transfer, where
Debt Securities of that series may be surrendered for exchange or redemption and
where notices and demands to or upon the Company in respect of the Debt
Securities of that series and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency.

      No payment of principal, premium or interest on Bearer Securities shall be
made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that, if
the Debt Securities of a series are denominated and payable in Dollars, payment
of principal of and any premium and interest on any Bearer Security (including
any additional amounts payable on Securities of such series, if so provided
pursuant to Section 3.1) shall be made at the office of the Company's Paying
Agent in the Borough of Manhattan, The City and State of New York, if (but only
if) payment in Dollars of the full amount of such principal, premium, interest
or additional amounts, as the case may be, at all offices or agencies outside
the United States maintained for the purpose by the Company in accordance with
this Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.

      The Company may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligations described in the preceding paragraphs.
The Company will give prompt written notice to the Trustee of any such
additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.

      Section 12.4. Money for Debt Securities; payments to be held in trust.

      If the Company shall at any time act as its own Paying Agent with respect
to any series of Debt Securities and Coupons, if any, it will, on or before each
due date of the principal of (and premium, if any) or interest on any of the
Debt Securities of such series, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal (and premium,
if any) or interest so becoming due until such sums shall be paid to such
Persons or

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<PAGE>

otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.

      Whenever the Company shall have one or more Paying Agents with respect to
any series of Debt Securities and Coupons, it will, by 10:00 a.m. (New York City
time) or on each due date of the principal (and premium, if any) or interest on
any Debt Securities of such series, deposit with any such Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled
thereto, and (unless any such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.

      Notwithstanding any term herein to the contrary, in no instance shall the
Trustee be under any duty or obligation (i) to maintain any office or to act in
any capacity as an agent for any purpose under this Indenture (or any supplement
hereto) outside the United States, or (ii) to act as a Paying Agent in respect
of any currency other than Dollars.

      The Company will cause each Paying Agent with respect to any series of
Debt Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:

            (1) hold all sums held by it for the payment of the principal of
      (and premium, if any) or interest on Debt Securities of such series in
      trust for the benefit of the Persons entitled thereto until such sums
      shall be paid to such Persons or otherwise disposed of as herein provided;

            (2) give the Trustee notice of any default by the Company (or any
      other obligor upon the Debt Securities of such series) in the making of
      any payment of principal (and premium, if any) or interest on the Debt
      Securities of such series; and

            (3) at any time during the continuance of any such default, upon the
      written request of the Trustee, forthwith pay to the Trustee all sums so
      held in trust by such Paying Agent.

      The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Debt Security of any series and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company upon Company Request, or (if then held by
the Company) shall be discharged from such trust; and the

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Holder of such Debt Security or Coupon shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be transmitted in the
manner and to the extent provided by Section 1.5, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such notification, any unclaimed balance of such money
then remaining will be repaid to the Company.

      Section 12.5. Waiver of certain covenants.

      The Company may omit in any particular instance to comply with any term,
provision or condition set forth in this Article XII (and, if so specified
pursuant to Section 3.1, any other covenant not set forth herein and specified
pursuant to Section 3.1 to be applicable to the Debt Securities of any series,
and to be subject to this Section 12.5 with respect to the Debt Securities of
such series, except as otherwise provided pursuant to Section 3.1) with respect
to the Debt Securities of such series if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Debt
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent expressly so waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.

      Section 12.6 Calculation of Original Issue Discount.

      The Company shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding Debt
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.

                                 ARTICLE XIII.

                         REDEMPTION OF DEBT SECURITIES

      Section 13.1. Applicability of Article.

      Debt Securities of any series which are redeemable before their Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified pursuant to Section 3.1 for Debt Securities of any series) in
accordance with this Article XIII.

      Section 13.2. Election to redeem; notice to Trustee.

      The election of the Company to redeem (or, in the case of Discount
Securities, to permit the Holders to elect to surrender for redemption) any Debt
Securities shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of the Debt

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<PAGE>

Securities of any series pursuant to Section 13.3, the Company shall, at least
45 days before the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Debt Securities of such series to be
redeemed. In the case of any redemption of Debt Securities (a) prior to the
expiration of any restriction on such redemption specified in the terms of such
Debt Securities or elsewhere in this Indenture, or (b) pursuant to an election
of the Company which is subject to a condition specified in the terms of such
Debt Securities or elsewhere in this Indenture the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restrictions or condition.

      Section 13.3. Selection by Trustee of Debt Securities to be redeemed.

      Except in the case of a redemption in whole of the Bearer Securities or
the Registered Securities of such series, if less than all the Debt Securities
of any series are to be redeemed at the election of the Company, the particular
Debt Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Debt Securities of such
series not previously called for redemption, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Debt Securities of
such series or any integral multiple thereof) of the principal amount of Debt
Securities of such series in a denomination larger than the minimum authorized
denomination for Debt Securities of such series pursuant to Section 3.2 in the
Currency in which the Debt Securities of such series are denominated. The
portions of the principal amount of Debt Securities so selected for partial
redemption shall be equal to the minimum authorized denominations for Debt
Securities of such series pursuant to Section 3.2 in the Currency in which the
Debt Securities of such series are denominated or any integral multiple thereof,
except as otherwise set forth in the applicable form of Debt Securities. In any
case when more than one Registered Security of such series is registered in the
same name, the Trustee in its discretion may treat the aggregate principal
amount so registered as if it were represented by one Registered Security of
such series.

      The Trustee shall promptly notify the Company in writing of the Debt
Securities selected for redemption and, in the case of any Debt Securities
selected for partial redemption, the principal amount thereof to be redeemed.

      For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Debt Securities shall relate, in
the case of any Debt Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debt Security which has been or is to be
redeemed.

      If any Debt Security selected for partial redemption is converted in part
before the Redemption Date, the converted portion of such Debt Security shall be
deemed, to the fullest extent practicable, to be the portion selected for
redemption. Debt Securities which have been converted during a selection of Debt
Securities to be redeemed, may be treated by the Trustee as Outstanding for the
purpose of such selection.

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      Section 13.4. Notice of redemption.

      Notice of redemption shall be given by the Company, or at the Company's
request, by the Trustee in the name and at the expense of the Company, not less
than 30 days and not more than 60 days prior to the Redemption Date to the
Holders of Debt Securities of any series to be redeemed in whole or in part
pursuant to this Article XIII, in the manner provided in Section 1.5. Any notice
so given shall be conclusively presumed to have been duly given, whether or not
the Holder receives such notice. Failure to give such notice, or any defect in
such notice to the Holder of any Debt Security of a series designated for
redemption, in whole or in part, shall not affect the sufficiency of any notice
of redemption with respect to the Holder of any other Debt Security of such
series.

      All notices of redemption shall state:

            (1) the Redemption Date;

            (2) the Redemption Price, or if not then ascertainable, the manner
      of calculation thereof;

            (3) that Debt Securities of such series are being redeemed by the
      Company pursuant to provisions contained in this Indenture or the terms of
      the Debt Securities of such series or a supplemental indenture
      establishing such series, if such be the case, together with a brief
      statement of the facts permitting such redemption;

            (4) if less than all Outstanding Debt Securities of any series are
      to be redeemed, the identification (and, in the case of partial
      redemption, the principal amounts) of the particular Debt Securities to be
      redeemed;

            (5) that on the Redemption Date the Redemption Price will become due
      and payable upon each such Debt Security to be redeemed, and that interest
      thereon, if any, shall cease to accrue on and after said date;

            (6) that, unless otherwise specified in such notice, Coupon
      Securities of any series, if any, surrendered for redemption must be
      accompanied by all Coupons maturing subsequent to the date fixed for
      redemption, failing which the amount of any such missing Coupon or Coupons
      will be deducted from the Redemption Price;

            (7) the Place or Places of Payment where such Debt Securities are to
      be surrendered for payment of the Redemption Price;

            (8) if Bearer Securities of any series are to be redeemed and any
      Registered Securities of such series are not to be redeemed, and if such
      Bearer Securities may be exchanged for Registered Securities not subject
      to redemption on this Redemption Date pursuant to Section 3.5(b) or
      otherwise, the last date on which such exchanges may be made;

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<PAGE>

            (9) the CUSIP number, if any, and that no representation is made as
      to the accuracy or correctness of the CUSIP number, if any, listed in such
      notice or printed on the Debt Securities; and

            (10) that the redemption is for a sinking fund, if such is the case.

      Section 13.5. Deposit of redemption price.

      On or prior to 10:00 a.m. (New York City time) on the Redemption Date for
any Debt Securities, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 12.4) an amount of money in the Currency or
Currencies in which such Debt Securities are denominated (except as provided
pursuant to Section 3.1) sufficient to pay the Redemption Price of such Debt
Securities or any portions thereof which are to be redeemed on that date.

      Section 13.6. Debt Securities payable on Redemption Date.

      Notice of redemption having been given as aforesaid, any Debt Securities
so to be redeemed shall become due and payable on the Redemption Date, at the
Redemption Price in the Currency in which the Debt Securities of such series are
payable (except as otherwise specified pursuant to Section 3.1 or 3.10), and on
and after such date (unless the Company shall default in the payment of the
Redemption Price) such Debt Securities shall cease to bear interest. Upon
surrender of any such Debt Security for redemption in accordance with said
notice, such Debt Security shall be paid by the Company at the Redemption Price;
provided, however, that installments of interest on Bearer Securities whose
Stated Maturity is on or prior to the Redemption Date shall be payable only at
an office or agency located outside the United States (except as otherwise
provided in Section 12.3) and, unless otherwise specified as contemplated by
Section 3.1, only upon presentation and surrender of Coupons for such interest;
and provided, further, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest on Registered Securities which have a
Stated Maturity on or prior to the Redemption Date for such Debt Securities
shall be payable according to the terms of such Debt Securities and the
provisions of Section 3.7.

      If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.

      If any Coupon Security surrendered for redemption shall not be accompanied
by all Coupons appertaining thereto maturing on or after the Redemption Date,
the Redemption Price for such Coupon Security may be reduced by an amount equal
to the face amount of all such missing Coupons. If thereafter the Holder of such
Coupon shall surrender to any Paying Agent outside the United States any such
missing Coupon in respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive the amount so
deducted. The surrender of such missing Coupon or Coupons may be waived by the
Company and the Trustee, if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless.

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<PAGE>

      Section 13.7. Debt Securities redeemed in part.

      Any Debt Security which is to be redeemed only in part shall be
surrendered at the Corporate Trust Office or such other office or agency of the
Company as is specified pursuant to Section 3.1 (in the case of Registered
Securities) and at an office of the Trustee, or at such other office or agency
of the Company outside the United States as is specified pursuant to Section 3.1
(in the case of Bearer Securities) with, if the Company, the Security Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company, the Security Registrar and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing, and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Debt Security without service charge, a new Debt
Security or Debt Securities of the same series, of like tenor and form, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered, and, in the case of a Coupon Security, with
appropriate Coupons attached. In the case of a Debt Security providing
appropriate space for such notation, at the option of the Holder thereof, the
Trustee, in lieu of delivering a new Debt Security or Debt Securities as
aforesaid, may make a notation on such Debt Security of the payment of the
redeemed portion thereof.

      Section 13.8. Conversion Arrangement in Call for Redemption.

In connection with any redemption of Debt Securities of any series, the Company
may arrange for the purchase and conversion of any such Debt Securities by an
agreement with one or more investment bankers or other purchasers to purchase
such Debt Securities by paying to the Trustee or the Paying Agent in trust for
the Holders of such Debt Securities, on or before 10:00 a.m. New York time on
the Redemption Date, an amount not less than the Redemption Price, together with
interest, if any, accrued to the redemption date of such Debt Securities, in
immediately available funds. Notwithstanding anything to the contrary contained
in this Article XIII, the obligation of the Company to pay the Redemption Price
of such Debt Securities, including all accrued interest, if any, shall be deemed
to be satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any Debt Securities not duly
surrendered for conversion by the Holders thereof, at the option of the Company,
may be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and surrendered by such purchasers for conversion,
all as of immediately prior to the close of business on the last Business Day on
which such Debt Securities called for redemption may be converted in accordance
with this Indenture and the terms of such Debt Securities, subject to payment to
the Trustee or Paying Agent of the above-described amount. The Trustee or the
Paying Agent shall hold and pay to the Holders whose Debt Securities are
selected for redemption any such amount paid to it in the same manner as it
would pay funds deposited with it by the Company for the redemption of Debt
Securities of such series. Without the Trustee's and the Paying Agent's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee and the
Paying Agent as set forth in this Indenture.

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                                  ARTICLE XIV.

                                 SINKING FUNDS

      Section 14.1. Applicability of Article.

      The provisions of this Article XIV shall be applicable to any sinking fund
for the retirement of Debt Securities of a series except as otherwise specified
pursuant to Section 3.1 for Debt Securities of such series.

      The minimum amount of any sinking fund payment provided for by the terms
of Debt Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Debt Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Debt Securities of any
series, the amount of any cash sinking fund payment may be subject to reduction
as provided in Section 14.2. Each sinking fund payment shall be applied to the
redemption of Debt Securities of any series as provided for by the terms of Debt
Securities of such series.

      Section 14.2. Satisfaction of mandatory sinking fund payments with Debt
Securities.

      In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Debt Securities of a series in cash, the Company may at its
option, at any time no more than sixteen months and no less than 45 days prior
to the date on which such sinking fund payment is due, deliver to the Trustee
Debt Securities of such series (together with the unmatured Coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Debt Securities of such series which have been redeemed through
the application of mandatory sinking fund payments pursuant to the terms of the
Debt Securities of such series, accompanied by a Company Order instructing the
Trustee to credit such obligations and stating that the Debt Securities of such
series were originally issued by the Company by way of bona fide sale or other
negotiation for value, provided that such Debt Securities shall not have been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such Debt
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

      Section 14.3. Redemption of Debt Securities for sinking fund.

      Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash in the Currency or Currencies in which the Debt
Securities of such series are denominated (except as provided pursuant to
Section 3.1) and the portion thereof, if any, which is to be satisfied by
delivering and crediting Debt Securities of such series pursuant to Section 14.2
and whether the Company intends to exercise its rights to make a permitted
optional sinking fund payment with respect to such series. Such certificate
shall be irrevocable

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and upon its delivery the Company shall be obligated to make the cash payment or
payments therein referred to, if any, on or before the next succeeding sinking
fund payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Debt Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit Debt Securities as provided in Section 14.2 and without the right to make
any optional sinking fund payment with respect to such series at such time.

      Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Debt Securities of any particular series shall be applied by the Trustee
(to the extent it is acting as a Paying Agent with respect to Dollars) or other
Paying Agent appointed by the Company (or by the Company if the Company is
acting as its own Paying Agent) on the sinking fund payment date on which such
payment is made (or, if such payment is made before a sinking fund payment date,
on the sinking fund payment date immediately following the date of such payment)
to the redemption of Debt Securities of such series at the Redemption Price
specified in such Debt Securities with respect to the sinking fund. Any sinking
fund moneys not so applied or allocated by the Trustee (to the extent it is
acting as a Paying Agent with respect to Dollars) or other Paying Agent
appointed by the Company (or by the Company if the Company is acting as its own
Paying Agent) to the redemption of Debt Securities shall be added to the next
sinking fund payment received by the Trustee (to the extent it is acting as a
Paying Agent with respect to Dollars) or other Paying Agent appointed by the
Company (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 12.4) for such series and, together with
such payment (or such amount so segregated) shall be applied in accordance with
the provisions of this Section. Any and all sinking fund moneys with respect to
the Debt Securities of any particular series held by the Trustee (to the extent
it is acting as a Paying Agent with respect to Dollars) or other Paying Agent
appointed by the Company (or if the Company is acting as its own Paying Agent,
segregated and held in trust as provided in Section 12.4) on the last sinking
fund payment date with respect to Debt Securities of such series and not held
for the payment or redemption of particular Debt Securities of such series shall
be applied by the Trustee (to the extent it is acting as a Paying Agent with
respect to Dollars) or other Paying Agent appointed by the Company (or by the
Company if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Debt Securities of such series
at Maturity.

      The Trustee shall select or cause to be selected the Debt Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
13.3 and the Company shall cause notice of the redemption thereof to be given in
the manner provided in Section 13.4. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 13.6.

      On or before 10:00 a.m. (New York City time) on each sinking fund payment
date, the Company shall pay to the Trustee (to the extent it is acting as a
Paying Agent with respect to Dollars) or other Paying Agent appointed by the
Company (or, if the Company is acting as its own Paying Agent, the Company shall
segregate and hold in trust as provided in Section 12.4) in

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cash a sum, in the Currency or Currencies in which Debt Securities of such
series are denominated (except as provided pursuant to Sections 3.1 or 3.10),
equal to the principal and any interest accrued to the Redemption Date for Debt
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section.

      Neither the Trustee, any Paying Agent nor the Company shall redeem any
Debt Securities of a series with sinking fund moneys or mail any notice of
redemption of Debt Securities of such series by operation of the sinking fund
for such series during the continuance of a default in payment of interest, if
any, on any Debt Securities of such series or of any Event of Default (other
than an Event of Default occurring as a consequence of this paragraph) with
respect to the Debt Securities of such series, except that if the notice of
redemption shall have been provided in accordance with the provisions hereof,
the Trustee or applicable Paying Agent (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Debt Securities if cash
sufficient for that purpose shall be deposited with the Trustee or such other
Paying Agent as provided above (or segregated by the Company) for that purpose
in accordance with the terms of this Article XIV. Except as aforesaid, any
moneys in the sinking fund for such series at the time when any such default or
Event of Default shall occur and any moneys thereafter paid into such sinking
fund shall, during the continuance of such default or Event of Default, be held
as security for the payment of the Debt Securities and Coupons, if any, of such
series; provided, however, that in case such default or Event of Default shall
have been cured or waived as provided herein, such moneys shall thereafter be
applied on or prior to the next sinking fund payment date for the Debt
Securities of such series on which such moneys may be applied pursuant to the
provisions of this Section.

                                  ARTICLE XV.

                                   DEFEASANCE

      Section 15.1. Applicability of Article.

      Except as otherwise provided pursuant to Section 3.1, if the Debt
Securities of a series are Registered Securities and denominated and payable
only in Dollars (except as provided pursuant to Section 3.1 and subject to the
proviso in the last sentence of this paragraph) then the provisions of this
Article XV shall be applicable. Defeasance provisions, if any, for Debt
Securities denominated and/or payable in a Foreign Currency or Currencies or for
Bearer Securities may be specified pursuant to Section 3.1; provided, however,
that nothing herein or therein shall obligate the Trustee (without its consent,
at its sole option) to hold or maintain any account, or act as Paying Agent with
respect to, any Foreign Currency or Currencies.

      Section 15.2. Defeasance upon deposit of moneys or U.S. Government
Obligations.

      At the Company's option, either (a) the Company shall be deemed to have
been Discharged (as defined below) from its obligations with respect to Debt
Securities of any series ("legal defeasance option") or (b) the Company shall
cease to be under any obligation to comply with any term, provision or condition
set forth in Article X and Article XII with respect to Debt Securities of any
series (and, if so specified pursuant to Section 3.1, any other obligation of
the Company or restrictive covenant added for the benefit of such series
pursuant to Section 3.1),

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and any noncompliance with such terms, provisions or covenants shall not
constitute a default or Event of Default with respect to the Debt Securities of
that series ("covenant defeasance option") at any time after the applicable
conditions set forth below have been satisfied:

            (1) the Company shall have deposited or caused to be deposited
      irrevocably with the Trustee as trust funds in trust, specifically pledged
      as security for, and dedicated solely to, the benefit of the Holders of
      the Debt Securities of such series (i) cash in United States Dollars in an
      amount, or (ii) U.S. Government Obligations (as defined below) which
      through the payment of interest and principal in respect thereof in
      accordance with their terms will provide, not later than one day before
      the due date of any payment, money in an amount, or (iii) a combination of
      (i) and (ii), sufficient, in the opinion (with respect to (i) and (ii)) of
      a nationally recognized firm of independent public accountants selected by
      the Company expressed in a written certification thereof delivered to the
      Trustee, to pay and discharge each installment of principal (including any
      mandatory sinking fund payments) of and premium, if any, and interest on,
      the Outstanding Debt Securities of such series on the dates such
      installments of interest or principal and premium are due;

            (2) such deposit shall not cause the Trustee with respect to the
      Debt Securities of that series to have a conflicting interest as defined
      in Section 6.8 and for purposes of the Trust Indenture Act with respect to
      the Debt Securities of any series;

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

            (4) if the Debt Securities of such series are then listed on any
      national securities exchange, the Company shall have delivered to the
      Trustee an Opinion of Counsel or a letter or other document from such
      exchange to the effect that the Company's exercise of its option under
      this Section would not cause such Debt Securities to be delisted;

            (5) no Event of Default or event (including such deposit) which,
      with notice or lapse of time or both, would become an Event of Default
      with respect to the Debt Securities of such series shall have occurred and
      be continuing on the date of such deposit and, with respect to the legal
      defeasance option only, no Event of Default under Section 5.1(5) or
      Section 5.1(6) or event which with the giving of notice or lapse of time,
      or both, would become an Event of Default under Section 5.1(5) or Section
      5.1(6) shall have occurred and be continuing on the 91st day after such
      date;

            (6) if the Debt Securities are to be redeemed prior to Stated
      Maturity (other than from mandatory sinking fund payments or analogous
      payments), notice of such redemption shall have been daily given pursuant
      to this Indenture or provision therefor satisfactory to the Trustee shall
      have been made;

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<PAGE>

            (7) the Company shall have delivered to the Trustee an Opinion of
      Counsel or a ruling from the Internal Revenue Service to the effect that
      the Holders of the Debt Securities of such series will not recognize
      income, gain or loss for Federal income tax purposes as a result of such
      deposit, defeasance or Discharge; and

            (8) no event or condition shall exist that, pursuant to the
      provisions of Article XVII, would prevent the Company from making payments
      of the principal of (and premium, if any) or interest on the Debt
      Securities of such series and Coupons appertaining thereto on the date of
      such deposit.

Notwithstanding the foregoing, if the Company exercises its covenant defeasance
option and an Event of Default under Section 5.1(5) or Section 5.1(6) or an
event which with the giving of notice or lapse of time, or both, would become an
Event of Default under Section 5.1(5) or Section 5.1(6) shall have occurred and
be continuing on the 91st day after the date of such deposit, the obligations of
the Company referred to under the definition of covenant defeasance option with
respect to such Debt Securities shall be reinstated.

Notwithstanding the Company's exercise of the covenant defeasance option, the
Company may subsequently exercise the legal defeasance option.

      "Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Debt Securities of such series and to have satisfied all the obligations under
this Indenture relating to the Debt Securities of such series (and the Trustee
for such series of Debt Securities, at the expense of the Company, shall execute
proper instruments acknowledging the same), except (A) the rights of Holders of
Debt Securities of such series to receive, from the trust fund described in
clause (1) above, payment of the principal of (and premium, if any) and interest
on such Debt Securities when such payments are due, (B) the Company's
obligations with respect to the Debt Securities of such series under Sections
3.4, 3.5, 3.6, 12.3 and 15.3 and (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder.

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

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<PAGE>

      Section 15.3. Deposited moneys and U.S. Government Obligations to be held
in trust.

      All moneys and U.S. Government Obligations deposited with the Trustee
pursuant to Section 15.2 in respect of Debt Securities of a series shall be held
in trust and applied by it, in accordance with the provisions of such Debt
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Debt Securities, of all sums due
and to become due thereon for principal (and premium, if any) and interest, if
any, but such money need not be segregated from other funds except to the extent
required by law.

      Section 15.4. Repayment to Company.

      The Trustee and any Paying Agent shall promptly pay or return to the
Company upon Company Request any moneys or U.S. Government Obligations held by
them at any time that, in the opinion of a nationally recognized firm of
independent certified public accountants selected by the Company expressed in a
written certification thereof delivered to the Trustee (which may be the same
opinion provided pursuant to Section 15.2(1)) are not required for the payment
of the principal of (and premium, if any) and interest on the Debt Securities of
any series for which money or U.S. Government Obligations have been deposited
pursuant to Section 15.2.

      The provisions of the last paragraph of Section 12.4 shall apply to any
money held by the Trustee or any Paying Agent under this Article XV that remains
unclaimed for two years after the Maturity of any series of Debt Securities for
which money or U.S. Government Obligations have been deposited pursuant to
Section 15.2.

                                  ARTICLE XVI.

                                   CONVERSION

      Section 16.1. Applicability; conversion privilege.

      Except as otherwise specified pursuant to Section 3.1 for Debt Securities
of any series, the provisions of this Article XVI shall be applicable to any
Debt Securities that are convertible into Common Stock. If so provided pursuant
to Section 3.1 with respect to the Debt Securities of any series, the Holder of
a Debt Security of such series shall have the right, at such Holder's option, to
convert, in accordance with the terms of such series of Debt Securities and this
Article XVI, all or any part (in a denomination of, unless otherwise specified
pursuant to Section 3.1 with respect to Securities of such series, $1,000 in
principal amount or any integral multiple thereof) of such Debt Security into
shares of Common Stock or, as to any Debt Securities called for redemption, at
any time prior to the time and date fixed for such redemption (unless the
Company shall default in the payment of the Redemption Price, in which case such
right shall not terminate at such time and date).

      Section 16.2. Conversion procedure; Conversion Price; fractional shares.

      (a) Each Debt Security to which this Article XVI is applicable shall be
convertible at the office of the Conversion Agent, and at such other place or
places, if any, specified pursuant to Section 3.1 with respect to the Debt
Securities of such series, into fully paid and nonassessable

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<PAGE>

shares (calculated to the nearest 1/100th of a share) of Common Stock. The Debt
Securities will be converted into shares of Common Stock at the Conversion Price
therefor. No payment or adjustment shall be made in respect of dividends on the
Common Stock or accrued interest on a converted Debt Security except as
described in Section 16.9. The Company may, but shall not be required, in
connection with any conversion of Debt Securities, to issue a fraction of a
share of Common Stock and, if the Company shall determine not to issue any such
fraction, the Company shall, subject to Section 16.3(4), make a cash payment
(calculated to the nearest cent) equal to such fraction multiplied by the
Closing Price of the Common Stock on the last Trading Day prior to the date of
conversion.

      (b) Before any Holder of a Debt Security shall be entitled to convert the
same into Common Stock, such Holder shall surrender such Debt Security duly
endorsed to the Company or in blank, or, in the case of Bearer Securities,
together with all unmatured Coupons and any matured Coupons in default attached
thereto, at the office of the Conversion Agent or at such other place or places,
if any, specified pursuant to Section 3.1 (in the case of Registered Securities)
and at an office of the Conversion Agent or at such other place or places, if
any, outside of the United States as is specified pursuant to Section 3.1 (in
the case of Bearer Securities), and shall give written notice to the Company at
said office or place that he elects to convert the same and shall state in
writing therein the principal amount of Debt Securities to be converted and the
name or names (with addresses) in which he wishes the certificate or
certificates for Common Stock to be issued; provided, however, that no Debt
Security or portion thereof shall be accepted for conversion unless the
principal amount of such Debt Security or such portion, when added to the
principal amount of all other Debt Securities or portions thereof then being
surrendered by the Holder thereof for conversion, exceeds the then effective
Conversion Price with respect thereto. If the Holder of a Bearer Security is
unable to produce any such unmatured Coupon or Coupons or matured Coupon or
Coupons in default, such conversion may be effected if the Bearer Securities to
be surrendered for conversion are accompanied by payment in funds acceptable to
the Company in an amount equal to the face amount of such missing Coupon or
Coupons, or the surrender of such missing Coupon or Coupons may be waived by the
Company and the Trustee if there is furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Bearer Security shall surrender to any Paying
Agent any such missing Coupon in respect of which such a payment shall have been
made, such Holder shall be entitled to receive the amount of such payment;
provided, however that except as otherwise provided in Section 12.3, interest
represented by Coupons shall be payable only upon presentation and surrender of
those Coupons at an office or agency located outside the United States. If more
than one Debt Security shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be
deliverable upon conversion shall be computed on the basis of the aggregate
principal amount of the Debt Securities (or specified portions thereof to the
extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver
at said office or place to such Holder of a Debt Security, or to his nominee or
nominees, certificates for the number of full shares of Common Stock to which he
shall be entitled as aforesaid, together, subject to the last sentence of
paragraph (a) above, with cash in lieu of any fraction of a share to which he
would otherwise be entitled. The Company shall not be required to deliver
certificates for shares of Common Stock while the stock transfer books for such
stock or the Security Register are duly closed for any purpose, but certificates
for shares of Common

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<PAGE>

Stock shall be issued and delivered as soon as practicable after the opening of
such books or Security Register. A Debt Security shall be deemed to have been
converted as of the close of business on the date of the surrender of such Debt
Security for conversion as provided above, and the Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record Holder or Holders of such Common Stock as of the close of
business on such date. In case any Debt Security shall be surrendered for
partial conversion, the Company shall execute and the Trustee shall authenticate
and deliver to or upon the written order of the Holder of the Debt Securities so
surrendered, without charge to such Holder (subject to the provisions of Section
16.8), a new Debt Security or Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Debt Security.

      Section 16.3. Adjustment of Conversion Price for Common Stock.

      The Conversion Price with respect to any Debt Security which is
convertible into Common Stock shall be adjusted from time to time as follows:

            (1) In case the Company shall, at any time or from time to time
      while any of such Debt Securities are outstanding, (i) pay a dividend in
      shares of its Common Stock to holders of Common Stock, (ii) combine its
      outstanding shares of Common Stock into a smaller number of shares of
      Common Stock, (iii) subdivide its outstanding shares of Common Stock into
      a greater number of shares of Common Stock or (iv) make a distribution in
      shares of Common Stock to holders of Common Stock, then the Conversion
      Price in effect immediately before such action shall be adjusted so that
      the Holders of such Debt Securities, upon conversion thereof into Common
      Stock immediately following such event, shall be entitled to receive the
      kind and amount of shares of capital stock of the Company which they would
      have owned or been entitled to receive upon or by reason of such event if
      such Debt Securities had been converted immediately before the record date
      (or, if no record date, the effective date) for such event. An adjustment
      made pursuant to this Section 16.3(1) shall become effective retroactively
      immediately after the record date in the case of a dividend or
      distribution and shall become effective retroactively immediately after
      the effective date in the case of a subdivision or combination. For the
      purposes of this Section 16.3(1), each Holder of Debt Securities shall be
      deemed to have failed to exercise any right to elect the kind or amount of
      securities receivable upon the payment of any such dividend, subdivision,
      combination or distribution (provided that if the kind or amount of
      securities receivable upon such dividend, subdivision, combination or
      distribution is not the same for each nonelecting share, then the kind and
      amount of securities or other property receivable upon such dividend,
      subdivision, combination or distribution for each nonelecting share shall
      be deemed to be the kind and amount so receivable per share by a plurality
      of the nonelecting shares).

            (2) In case the Company shall, at any time or from time to time
      while any of such Debt Securities are outstanding, issue rights or
      warrants to all holders of shares of its Common Stock entitling them (for
      a period expiring within 45

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<PAGE>

      days after the record date for such issuance) to subscribe for or purchase
      shares of Common Stock (or securities convertible into shares of Common
      Stock) at a price per share less than the Current Market Price of the
      Common Stock at such record date (treating the price per share of the
      securities convertible into Common Stock as equal to (x) the sum of (i)
      the price for a unit of the security convertible into Common Stock and
      (ii) any additional consideration initially payable upon the conversion of
      such security into Common Stock divided by (y) the number of shares of
      Common Stock initially underlying such convertible security), the
      Conversion Price with respect to such Debt Securities shall be adjusted so
      that it shall equal the price determined by dividing the Conversion Price
      in effect immediately prior to the date of issuance of such rights or
      warrants by a fraction, the numerator of which shall be the number of
      shares of Common Stock outstanding on the date of issuance of such rights
      or warrants plus the number of additional shares of Common Stock offered
      for subscription or purchase (or into which the convertible securities so
      offered are initially convertible), and the denominator of which shall be
      the number of shares of Common Stock outstanding on the date of issuance
      of securities which the aggregate offering price of the total number of
      shares of securities so offered for subscription or purchase (or the
      aggregate purchase price of the convertible securities so offered plus the
      aggregate amount of any additional consideration initially payable upon
      conversion of such securities into Common Stock) would purchase at such
      Current Market Price of the Common Stock. Such adjustment shall become
      effective retroactively immediately after the record date for the
      determination of shareholders entitled to receive such rights or warrants.

            (3) In the case the Company shall, at any time or from time to time
      while any of such Debt Securities are outstanding, distribute to all
      holders of shares of its Common Stock (including any such distribution
      made in connection with a consolidation or merger in which the Company is
      the continuing corporation and the Common Stock is not changed or
      exchanged) cash, evidences of its indebtedness, securities or assets
      (excluding (i) regular periodic cash dividends in amounts, if any,
      determined from time to time by the Board of Directors, (ii) dividends
      payable in shares of Common Stock for which adjustment is made under
      Section 16.3(1) or (iii) rights or warrants to subscribe for or purchase
      securities of the Company (excluding those referred to in Section
      16.3(2)), then in each such case the Conversion Price with respect to such
      Debt Securities shall be adjusted so that it shall equal the price
      determined by dividing the Conversion Price in effect immediately prior to
      the date of such distribution by a fraction, the numerator of which shall
      be the Current Market Price of the Common Stock on the record date
      referred to below, and the denominator of which shall be such Current
      Market Price of the Common Stock less the then fair market value (as
      determined by the Board of Directors of the Company, whose determination
      shall be conclusive) of the portion of the cash or assets or evidences of
      indebtedness or securities so distributed or of such subscription rights
      or warrants applicable to one share of Common Stock (provided that such
      denominator shall never be less than 1.0); provided however, that no
      adjustment shall be made with respect to any distribution of rights to
      purchase securities of

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<PAGE>

      the Company if a Holder of Debt Securities would otherwise be entitled to
      receive such rights upon conversion at any time of such Debt Securities
      into Common Stock unless such rights are subsequently redeemed by the
      Company, in which case such redemption shall be treated for purposes of
      this section as a dividend on the Common Stock. Such adjustment shall
      become effective retroactively immediately after the record date for the
      determination of shareholders entitled to receive such distribution; and
      in the event that such distribution is not so made, the Conversion Price
      shall again be adjusted to the Conversion Price which would then be in
      effect if such record date had not been fixed.

            (4) The Company shall be entitled to make such additional
      adjustments in the Conversion Price, in addition to those required by
      subsections 16.3(1), 16.3(2), and 16.3(3), as shall be necessary in order
      that any dividend or distribution of Common Stock, any subdivision,
      reclassification or combination of shares of Common Stock or any issuance
      of rights or warrants referred to above shall not be taxable to the
      holders of Common Stock for United States Federal income tax purposes.

            (5) In any case in which this Section 16.3 shall require that any
      adjustment be made effective as of or retroactively immediately following
      a record date, the Company may elect to defer (but only for five (5)
      Trading Days following the filing of the statement referred to in Section
      16.5) issuing to the Holder of any Debt Securities converted after such
      record date the shares of Common Stock and other capital stock of the
      Company issuable upon such conversion over and above the shares of Common
      Stock and other capital stock of the Company issuable upon such conversion
      on the basis of the Conversion Price prior to adjustment; provided,
      however, that the Company shall deliver to such Holder a due bill or other
      appropriate instrument evidencing such Holder's right to receive such
      additional shares upon the occurrence of the event requiring such
      adjustment.

            (6) All calculations under this Section 16.3 shall be made to the
      nearest cent or one-hundredth of a share of security, with one-half cent
      and 0.005 of a share, respectively, being rounded upward. Notwithstanding
      any other provision of this Section 16.3, the Company shall not be
      required to make any adjustment of the Conversion Price unless such
      adjustment would require an increase or decrease of at least 1% of such
      price. Any lesser adjustment shall be carried forward and shall be made at
      the time of and together with the next subsequent adjustment which,
      together with any adjustment or adjustments so carried forward, shall
      amount to an increase or decrease of at least 1% in such price. Any
      adjustments under this Section 16.3 shall be made successively whenever an
      event requiring such an adjustment occurs.

            (7) In the event that at any time, as a result of an adjustment made
      pursuant to this Section 16.3, the Holder of any Debt Security thereafter
      surrendered for conversion shall become entitled to receive any shares of
      stock of the Company other than shares of Common Stock into which the Debt
      Securities

                                       91
<PAGE>

      originally were convertible, the Conversion Price of such other shares so
      receivable upon conversion of any such Debt Security shall be subject to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as practicable to the provisions with respect to Common Stock contained in
      subparagraphs (1) through (6) of this Section 16.3, and the provisions of
      Sections 16.1, 16.2 and 16.4 through 16.9 with respect to the Common Stock
      shall apply on like or similar terms to any such other shares and the
      determination of the Board of Directors as to any such adjustment shall be
      conclusive.

            (8) No adjustment shall be made pursuant to this Section: (i) if the
      effect thereof would be to reduce the Conversion Price below the par value
      (if any) of the Common Stock or (ii) subject to 16.3(5) hereof, with
      respect to any Debt Security that is converted prior to the time such
      adjustment otherwise would be made.

      Section 16.4. Consolidation or merger of the Company.

      In case of either (a) any consolidation or merger to which the Company is
a party, other than a merger or consolidation in which the Company is the
surviving or continuing corporation and which does not result in a
reclassification of, or change (other than a change in par value or from par
value to no par value or from no par value to par value, as a result of a
subdivision or combination) in, outstanding shares of Common Stock or (b) any
sale or conveyance of all or substantially all of the property and assets of the
Company to another Person, then the Conversion Price shall not be adjusted. If
any of the events described in the previous sentence shall occur, the Company
shall execute with the Trustee a supplemental indenture to provide that each
Debt Security then outstanding shall be convertible from and after such merger,
consolidation, sale or conveyance of property and assets into the kind and
amount of shares of stock or other securities and property (including cash)
receivable upon such consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock into which such Debt Securities would have
been converted immediately prior to such consolidation, merger, sale or
conveyance, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article XVI (and assuming
such holder of Common Stock failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash or other property (including cash)
receivable upon such consolidation, merger, sale or conveyance (provided that,
if the kind or amount of securities, cash or other property (including cash)
receivable upon such consolidation, merger, sale or conveyance is not the same
for each nonelecting share, then the kind and amount of securities, cash or
other property (including cash) receivable upon such consolidation, merger, sale
or conveyance for each nonelecting share shall be deemed to be the kind and
amount so receivable per share by a plurality of the nonelecting shares or
securities)). The Company shall not enter into any of the transactions referred
to in clause (a) or (b) of the preceding sentence unless effective provision
shall be made so as to give effect to the provisions set forth in this Section
16.4. The provisions of this Section 16.4 shall apply similarly to successive
consolidations, mergers, sales or conveyances.

                                       92
<PAGE>

      Section 16.5. Notice of adjustment.

      Whenever an adjustment in the Conversion Price with respect to a series of
Debt Securities is required:

            (1) the Company shall forthwith place on file with the Trustee and
      any Conversion Agent for such Securities a certificate of the Treasurer or
      Chief Financial Officer of the Company, stating the adjusted Conversion
      Price determined as provided herein and setting forth in reasonable detail
      such facts as shall be necessary to show the reason for and the manner of
      computing such adjustment, such certificate to be conclusive evidence that
      the adjustment is correct; and

            (2) a notice stating that the Conversion Price has been adjusted and
      setting forth the adjusted Conversion Price shall forthwith be given to
      the Holders of the Debt Securities of such series by the Company, or at
      the Company's request, by the Trustee in the name and at the expense of
      the Company, in the manner provided in Section 1.5. Any notice so given
      shall be conclusively presumed to have been duly given, whether or not the
      Holder receives such notice.

      Section 16.6. Notice in certain events.

      In case:

            (1) of a consolidation or merger to which the Company is a party and
      for which approval of any shareholders of the Company is required, or of
      the sale or conveyance to another Person or entity or group of Persons or
      entities acting in concert as a partnership, limited partnership,
      syndicate or other group (within the meaning of Rule 13d-3 under the
      Securities Exchange Act of 1934, as amended) of all or substantially all
      of the property and assets of the Company; or

            (2) of the voluntary or involuntary dissolution, liquidation or
      winding up of the Company; or

            (3) of any action triggering an adjustment of the Conversion Price
      pursuant to this Article XVI,

then, in each case, the Company shall cause to be filed with the Trustee and the
Conversion Agent for the applicable Debt Securities, and shall cause to be
given, to the Holders of record of applicable Debt Securities in the manner
provided in Section 1.5, at least fifteen (15) days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Conversion Price pursuant to this Article XVI,
or, if a record is not to be taken, the date as of which the holders of record
or Common Stock entitled to such distribution, rights or warrants are to be
determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the Conversion Price pursuant to this Article XVI is expected to
become effective, and the date as of which it is

                                       93
<PAGE>

expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up.

      Failure to give such notice or any defect therein shall not affect the
legality or validity of the proceedings described in clause (1), (2) or (3) of
this Section 16.6.

      Section 16.7. Company to reserve stock; registration; listing.

      (a) The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued shares of Common Stock,
for the purpose of effecting the conversion of the Debt Securities, such number
of its duly authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all applicable outstanding Debt
Securities into such Common Stock at any time (assuming that, at the time of the
computation of such number of shares or securities, all such Debt Securities
would be held by a single holder); provided, however, that nothing contained
herein shall preclude the Company from satisfying its obligations in respect of
the conversion of the Debt Securities by delivery of purchased shares of Common
Stock which are held in the treasury of the Company. The Company shall from time
to time, in accordance with the laws of the State of Missouri, use its best
efforts to cause the authorized amount of the Common Stock to be increased if
the aggregate of the authorized amount of the Common Stock remaining unissued
and the issued shares of such Common Stock in its treasury (other than any such
shares reserved for issuance in any other connection) shall not be sufficient to
permit the conversion of all Debt Securities.

      (b) If any shares of Common Stock which would be issuable upon conversion
of Debt Securities hereunder require registration with or approval of any
governmental authority before such shares or securities may be issued upon such
conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares or securities to be duly registered or approved,
as the case may be. The Company will endeavor to list the shares of Common Stock
required to be delivered upon conversion of the Debt Securities prior to such
delivery upon the principal national securities exchange upon which the
outstanding Common Stock is listed at the time of such delivery.

      Section 16.8. Taxes on conversion.

      The Company shall pay any and all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Debt Securities pursuant hereto. The Company
shall not, however, be required to pay any such tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock or the portion, if any, of the Debt Securities which are not so converted
in a name other than that in which the Debt Securities so converted were
registered (in case of Registered Securities), and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of such tax or has established to the satisfaction of the
Company that such tax has been paid.

                                       94
<PAGE>

      Section 16.9. Conversion after record date.

      If any Debt Securities are surrendered for conversion subsequent to the
record date preceding an Interest Payment Date but on or prior to such Interest
Payment Date (except Debt Securities called for redemption on a Redemption Date
between such record date and Interest Payment Date), the Holder of such Debt
Securities at the close of business on such record date shall be entitled to
receive the interest payable on such Debt Securities on such Interest Payment
Date notwithstanding the conversion thereof. Debt Securities surrendered for
conversion during the period from the close of business on any record date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date shall (except in the case of Debt Securities which have been called
for redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds and in the Currency
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the Debt Securities being surrendered for conversion.
Except as provided in this Section 16.9, no adjustments in respect of payments
of interest on Debt Securities surrendered for conversion or any dividends or
distributions of interest on the Common Stock issued upon conversion shall be
made upon the conversion of any Debt Securities.

      Section 16.10. Conversion of Debt Securities into Preferred Shares or
other Securities.

      Notwithstanding anything to the contrary in this Article XVI, the Company
may issue Debt Securities that are convertible into Preferred Stock or other
securities of the Company, including Preferred Shares convertible into Common
Stock, in which case all terms and conditions relating to the conversion of Debt
Securities into Preferred Shares or other securities, including any terms
similar to those provided in Sections 16.1 through 16.12, shall be as provided
in or pursuant to an appropriate Board Resolution or in any indenture
supplemental hereto or as otherwise contemplated by Section 3.1.

      Section 16.11. Company determination final.

      Any determination that the Company or the Board of Directors must make
pursuant to this Article XVI is final and conclusive.

      Section 16.12. Trustee's disclaimer.

      The Trustee has no duty to determine when an adjustment under this Article
XVI should be made, how it should be made or what it should be. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Debt Securities. The Trustee shall not be responsible
for the Company's failure to comply with this Article XVI. Each Conversion Agent
other than the Company shall have the same protection under this Section as the
Trustee.

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<PAGE>

                                 ARTICLE XVII.
                                  SUBORDINATION

      Section 17.1. Agreement to subordinate.

      The Company agrees, and each Holder by accepting any Debt Securities
agrees, that, unless otherwise specified pursuant to Section 3.1 with respect to
any series of Debt Securities, the indebtedness evidenced by the Debt Securities
is subordinated in right of payment, to the extent and in the manner provided in
this Article XVII, to the prior payment in full of all Senior Indebtedness, and
that the subordination is for the benefit of, and shall be enforceable directly
by, the holders of Senior Indebtedness, without any act or notice of acceptance
hereof or reliance hereon.

      Section 17.2. Certain definitions.

      "Senior Indebtedness" means the principal, premium, if any, and interest
on (i) all indebtedness of the Company, whether outstanding on the date hereof
or thereafter created, incurred or assumed (including, without limitation, such
indebtedness issued or to be issued under the Company's Senior Indenture dated
[__], 20__), that is for borrowed money, or evidenced by a note or similar
instrument given in connection with the acquisition of any business, properties
or assets, including securities, (ii) any indebtedness of any other Person of
the kind described in the preceding clause (i) for the payment of which the
Company is responsible or liable as guarantor or otherwise and (iii) amendments,
modifications, renewals, extensions, deferrals and refundings of any such
indebtedness. Senior Indebtedness shall continue to be Senior Indebtedness and
to be entitled to the benefits of the subordination provisions of this Article
XVII irrespective of any amendment, modification or waiver of any term of the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (A) indebtedness incurred for the purchase of goods or
materials or for services obtained in the ordinary course of business and (B)
any indebtedness which by its terms is expressly made pari passu with or
subordinated to the Debt Securities.

      Section 17.3. Liquidation; dissolution; bankruptcy, etc.

      Unless otherwise specified pursuant to Section 3.1 with respect to any
series of Debt Securities, in the event of:

            (1) any insolvency, bankruptcy, receivership, liquidation,
      reorganization, readjustment, composition or other similar proceeding
      relating to the Company, its creditors or its property;

            (2) any proceeding for the liquidation, dissolution or other winding
      up of the Company, voluntary or involuntary, whether or not involving
      insolvency or bankruptcy proceedings;

            (3) any assignment by the Company for the benefit of creditors; or

                                       96
<PAGE>

            (4) any other marshalling of the assets of the Company, all Senior
      Indebtedness (including, without limitation, interest accruing after the
      commencement of any such proceeding, assignment or marshalling of assets)
      shall first be paid in full before any payment or distribution, whether in
      cash, securities or other property, shall be made by the Company on
      account of the Debt Securities. In any such event, any payment or
      distribution, whether in cash, securities or other property (other than
      securities of the Company or any other Corporation provided for by a plan
      of reorganization or a readjustment, the payment of which is subordinate,
      at least to the extent provided in the subordination provisions of this
      Indenture with respect to the indebtedness evidenced by the Debt
      Securities, to the payment of all Senior Indebtedness at the time
      outstanding and to any securities issued in respect thereof under any such
      plan of reorganization or readjustment), which would otherwise (but for
      the provisions of this Article XVII) be payable or deliverable in respect
      of the Debt Securities (including any such payment or distribution which
      may be payable or deliverable by reason of the payment of any other
      indebtedness of the Company being subordinated to the payment of the Debt
      Securities) shall be paid or delivered directly to the holders of Senior
      Indebtedness, or to their representative or trustee, in accordance with
      the priorities then existing among such holders until all Senior
      Indebtedness shall have been paid in full.

      Section 17.4. Default on Senior Indebtedness.

      Unless otherwise specified pursuant to Section 3.1 with respect to any
series of Debt Securities, if (i) the Company defaults in the payment of any
principal of (or premium, if any) or interest on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed for
prepayment or declaration or otherwise or (ii) an event of default occurs with
respect to any Senior Indebtedness permitting the holders thereof to accelerate
the maturity thereof and written notice of such event of default (requesting
that payments on the Debt Securities cease) is given to the Company by the
holders of Senior Indebtedness, then unless and until such default in payment or
event of default shall have been cured or waived or shall have ceased to exist,
no direct or indirect payment (in cash, property or securities, by set-off or
otherwise) shall be made or agreed to be made on account of the Debt Securities
or interest thereon or in respect of any repayment, redemption, retirement,
purchase or other acquisition of the Debt Securities.

      Section 17.5. When distribution must be paid over.

      If a distribution is made to the Trustee or any Holder at a time when a
Responsible Officer of the Trustee or such Holder has actual knowledge that
because of this Article XVII such distribution should not have been made to it,
the Trustee or such Holder who receives the distribution shall hold it in trust
for the benefit of, and, upon written request, shall pay it over to, the holders
of Senior Indebtedness as their interests may appear, or their agent or
representative or the trustee under the indenture or other agreement (if any)
pursuant to which Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all principal, premium,
if any, and interest then payable with respect to any Senior Indebtedness.

                                       97
<PAGE>

      With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article XVII, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of Holders
or the Company or any other person money or assets to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article XVII, except if
such payment is made as a result of the negligence, bad faith or willful
misconduct of the Trustee.

      Section 17.6. Notice by Company.

      The Company shall promptly notify in writing the Trustee and any Paying
Agent of any facts known to the Company that would cause a payment with respect
to the Debt Securities to violate this Article XVII, but failure to give such
notice shall not affect the subordination of the Debt Securities to the Senior
Indebtedness provided in this Article XVII.

      Section 17.7. Subrogation.

      Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. After all Senior
Indebtedness is paid in full and until the Debt Securities are paid in full,
Holders shall be subrogated (equally and ratably with all other indebtedness as
to which the right to receive payment is pari passu with the Debt Securities) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness, and such
payments or distributions received by any Holder of Debt Securities of a series
(unless otherwise specified pursuant to Section 3.1 with respect to such
series), by reason of such subrogation, of cash, securities or other property
which otherwise would be paid or distributed to the holders of Senior
Indebtedness, shall, as between the Company and its creditors other than the
holders of Senior Indebtedness, on the one hand, and the Holders of Debt
Securities, on the other, be deemed to be a payment by the Company on account of
Senior Indebtedness, and not on account of such series of Debt Securities.

      Section 17.8. Relative Rights.

      This Article XVII defines the relative rights of Holders and holders of
Senior Indebtedness. Unless otherwise specified pursuant to Section 3.1 with
respect to any series of Debt Securities, nothing in this Indenture shall:

            (1) impair, as between the Company and Holders, the obligation of
      the Company, which is absolute and unconditional, to pay principal of and
      interest on the Debt Securities in accordance with their terms;

            (2) affect the relative rights of Holders and creditors of the
      Company other than their rights in relation to holders of Senior
      Indebtedness; or

                                       98
<PAGE>

            (3) prevent the Trustee or any Holder from exercising its available
      remedies upon a Default or Event of Default, subject to the rights of
      holders and owners of Senior Indebtedness to receive distributions and
      payments otherwise payable to Holders.

      If the Company fails because of this Article XVII to pay principal of or
interest on Debt Securities on the date such payment is due, the failure is
still a Default or Event of Default.

      Section 17.9. Subordination may not be impaired by Company.

      No present or future holder of any Senior Indebtedness shall be prejudiced
in the right to enforce subordination of the indebtedness constituting the
applicable series of Debt Securities by any act or failure to act on the part of
the Company.

      Section 17.10. Distribution.

      Upon any payment or distribution of assets of the Company referred to in
this Article XVII, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other debt of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XVII.

      Section 17.11. Rights of Trustee and Paying Agent.

      Notwithstanding the provisions of this Article XVII or any other provision
of this Indenture, neither the Trustee nor any Paying Agent shall be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment or distribution by the Trustee or such Paying Agent, or the taking
of any action by the Trustee or such Paying Agent, and the Trustee or such
Paying Agent may continue to make payments on the Debt Securities unless, in the
case of the Trustee, and in the case of such Paying Agent as long as the Trustee
is such Paying Agent, a Responsible Officer shall have received at the Corporate
Trust Office of the Trustee, and in the case of a Paying Agent other than the
Trustee, it shall have received, in each case at least two Business Days prior
to the date of such payment, written notice of facts that would cause any such
payment with respect to the Securities to violate this Article XVII. The Trustee
or any Paying Agent, as applicable, shall promptly provide a copy of such notice
to the Holders. Nothing in this Article XVII shall limit the right of the
holders of Senior Indebtedness to recover payments as contemplated elsewhere in
this Article XVII or impair the claims of, or payments to, the Trustee under or
pursuant to Section 6.7.

      The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee subject
to Trust Indenture Act Sections 310(b) and 311. Any Paying Agent may do the
same.

                                       99
<PAGE>

      Section 17.12. Authorization to effect subordination.

      Each Holder of Debt Securities by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article XVII (to
the extent the same may be modified pursuant to Section 3.1 with respect to any
series of Debt Securities), and appoints the Trustee his attorney-in-fact for
any and all such purposes.

                                 ARTICLE XVIII.
                            EXTENDED INTEREST PERIOD

      Section 18.1. Extension of Interest Payment Period.

      So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time and from time to time during the term of the
Debt Securities of any series, to defer payments of interest by extending the
interest payment period of such Debt Securities for an Extended Interest Period
not exceeding 20 consecutive quarters, during which Extended Interest Period no
interest shall be due and payable; provided that no Extended Interest Period may
extend beyond the Stated Maturity for the principal of the Debt Securities of
such series. At the end of the Extended Interest Period, the Company shall
calculate (and deliver such calculation to the Trustee) and pay on the next
Interest Payment Date all interest accrued and unpaid on the Debt Securities of
such series, including any additional payments and additional interest accrued
thereon ("Additional Interest"), (together, the "Deferred Payments") that shall
be payable to the Holders of Registered Securities of such series on the first
Regular Record Date after the end of the Extended Interest Period. Before the
termination of any Extended Interest Period, the Company may further extend such
period, provided that such period together with all such further extensions
thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity
Date of such Debt Securities. Upon the termination of any Extended Interest
Period and upon the payment of all Deferred Payments then due, the Company may
commence a new Extended Interest Period, subject to the foregoing requirements.
No interest or Additional Interest shall be due and payable during an Extended
Interest Period, except at the end thereof, but the Company may prepay at any
time all or any portion of the interest and Additional Interest accrued during
an Extended Interest Period.

      Section 18.2. Notice of extension.

      (a) The Company shall give the Holders of such Debt Securities and the
Trustee written notice of its selection of such Extended Interest Period at
least two Business Days before the earlier of (i) the next succeeding Interest
Payment Date; or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to The New York Stock Exchange,
Nasdaq or other applicable national exchange or self-regulatory organization or
to holders of the Debt Securities.

      (b) The quarter in which any notice is given pursuant to paragraph (a) of
this Section 18.2 shall be counted as one of the 20 quarters permitted in the
maximum Extended Interest Period permitted under Section 18.1.

                                      100
<PAGE>

      Section 18.3. Limitation on transactions.

      If the Company shall exercise its right to defer payment of interest as
provided in Section 18.1, then (i) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (A) dividends or distributions in common stock of the Company, or
any declaration of a non-cash dividend in connection with the implementation of
a shareholder rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, and
(B) purchases of common stock of the Company related to the rights under any of
the Company's benefit plans for its directors, officers or employees); (ii) the
Company shall not make any payment of principal of (and premium, if any) or
interest on or repay, repurchase or redeem any debt securities issued by the
Company which rank pari passu with or junior in interest to the Debt Securities
of a series issued under this Indenture; and (iii) the Company shall not redeem,
purchase or acquire less than all of the Outstanding Debt Securities of such
series.

      Section 18.4. Applicability of Article.

      Notwithstanding anything in this Indenture to the contrary, the provisions
of this Article XVIII only shall apply to Debt Securities of any series to which
this Article expressly is made applicable, as specified pursuant to Section 3.1
for any such series of Debt Securities.

                                      101
<PAGE>

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and attested, all as of the day and year first above written.

                                 TALX CORPORATION

                                 By: ________________________________

                                 Name:________________________________
                                 Title: ________________________________

Attest:

________________________________
Name: __________________________
Title:__________________________

                                 THE BANK OF NEW YORK TRUST
                                 COMPANY, N.A.,
                                 as Trustee

                                 By: ________________________________
                                 Name: ________________________________
                                 Title: ________________________________

<PAGE>

                                                                       EXHIBIT A

                            [FORMS OF CERTIFICATION]

                       [FORM OF CERTIFICATE TO BE GIVEN BY
                   PERSON ENTITLED TO RECEIVE BEARER SECURITY
                     OR INTEREST PRIOR TO AN EXCHANGE DATE]

                                   CERTIFICATE

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

      This is to certify that as of the date hereof and except as set forth
below principal amount of the above captioned Debt Securities held by you for
our account (i) is owned by person(s) that are not United States person(s) (as
defined below), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (as defined in Section
1.165-12(c)(1)(iv) of the United States Treasury regulations) ("financial
institutions") purchasing for their own account or for resale, or (b) United
States person(s) who acquired the Debt Securities through foreign branches of
United States financial institutions and who hold the Debt Securities through
such United States financial institutions on the date hereof (and in either case
(a) or (b), each such United States financial institution hereby agrees, on its
own behalf or through its agent, that you may advise the Company or the
Company's agent that it will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the Treasury regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for the purpose of resale during the
restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United
States Treasury regulations), and in addition if the owner of the Debt
Securities is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or (ii)) this is
to further certify that such financial institution has not acquired the Debt
Securities for the purpose of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.

      We undertake to advise you promptly by facsimile transmission on or prior
to the date on which you intend to submit your certification relating to the
beneficial interest in the temporary global Debt Security held by you for our
account in accordance with your operating procedures if any applicable statement
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.

      This certificate excepts and does not relate to ________ principal amount
of Debt Securities held by you for our account as to which we are not able to
provide a certificate in this form. We understand that exchange of such portion
of the temporary Global Note for definitive Bearer Securities or interests in a
Permanent Global Note (or if relevant, collection of any interest) cannot be
made until we are able to provide a certificate in this form.

                                       2
<PAGE>

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

      "United States person" means any citizen or resident of the United States,
any corporation, partnership or other entity created or organized in or under
the laws of the United States and any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
"United States" means the United States of America (including the States and the
District of Columbia) and its "possessions" which include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.

Dated:________________________________, 20__

[To be dated no earlier than the
10th day prior to (i) the Exchange Date, or
(ii) the relevant Interest Payment Date
occurring prior to the Exchange Date, as
applicable]

                                              By:_____________________________
                                                 As, or as agent for, the
                                                 beneficial owner(s) of the
                                                 portion of the temporary
                                                 Global Note to which this
                                                 certificate relates.

                                        3
<PAGE>

                                                                       EXHIBIT B

                  [FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
        AND CLEARSTREAM BANKING, S.A. IN CONNECTION WITH THE EXCHANGE OF
        A PORTION OF A TEMPORARY GLOBAL NOTE OR PAYMENT OF INTEREST PRIOR
                             TO THE EXCHANGE DATE]

                                   CERTIFICATE

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

      The undersigned certifies that, based solely on certifications we have
received in writing, by facsimile transmission or by electronic transmission
from member organizations appearing in our records as persons being entitled to
a portion of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Indenture as of the date hereof,
_________ principal amount of the above-captioned Debt Securities (i) is owned
by person(s) that are not United States person(s) (as defined below), (ii) is
owned by United States person(s) that are (a) foreign branches of United States
financial institutions (as defined in Section 1.165-12(c)(1)(iv) of the United
States Treasury regulations) ("financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the Debt
Securities through foreign branches of United States financial institutions and
who hold the Debt Securities through such United States financial institutions
on the date hereof (and in either case (a) or (b), each such United States
financial institution has agreed, on its own behalf or through its agent, that
we may advise the Company or the Company's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the Treasury regulations thereunder), or (iii) is owned by
United States or foreign financial institution(s) for the purpose of resale
during the restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7) of
the United States Treasury regulations), and in addition United States or
foreign financial institutions described in clause (iii) above (whether or not
also described in clause (i) or (ii)) have certified that they have not acquired
the Debt Securities for the purpose of resale directly or indirectly to a United
States person or to a person within the United States or its possessions.

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

      We understand that this certificate is required in connection with certain
tax laws and regulations of the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably

                                       4
<PAGE>

authorize you to produce this certificate or a copy thereof to any interested
party in such proceedings.

      "United States person" means any citizen or resident of the United States,
any corporation, partnership or other entity created or organized in or under
the laws of the United States and any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
"United States" means the United States of America (including the States and the
District of Columbia) and its "possessions" which include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.

Dated :______________, 20__

[To be dated no earlier than the
10th day prior to (i) the Exchange
Date, or (ii) the relevant Interest
Payment Date occurring prior to the
Exchange Date, as applicable]

                                          By:______________________________
                                             [EUROCLEAR BANK, S.A., as
                                             Operator of the Euro-Clear System]

                                              [CLEARSTREAM BANKING, S.A.]]

                                       5
<PAGE>

           Reconciliation and tie between Trust Indenture Act of 1939
                    and Indenture, dated as of     [__], 20

<TABLE>
<CAPTION>
Trust Indenture Act Section   Indenture Section
---------------------------   -----------------
<S>                           <C>
Section 310 (a)(1)            6.9
            (a)(2)            6.9
            (a)(3)            Not Applicable
            (a)(4)            Not Applicable
            (a)(5)            6.9
            (b)               6.8, 6.10
            (c)               Not Applicable
Section 311 (a)               6.13(a)
            (b)               6.13(b)
            (c)               Not Applicable
Section 312 (a)               7.1, 7.2(a)
            (b)               7.2(b)
            (c)               7.2(c)
Section 313 (a)               7.3(a)
            (b)               7.3(b)
            (c)               7.3(a),
                              7.3(c)
            (d)               7.3(d)
Section 314 (a)               7.4, 12.2
            (b)               Not Applicable
            (c)(1)            1.2
            (c)(2)            1.2
            (c)(3)            Not Applicable
            (d)               Not Applicable
            (e)               1.2
Section 315 (a)               6.1(a),
                              6.1(c)
            (b)               6.2, 7.3(a)(7)
            (c)               6.1(b)
            (d)(1)            6.1(a)
            (d)(2)            6.1(c)(2)
            (d)(3)            6.1(c)(3)
            (e)               5.14
Section 316 (a)(1)(A)         5.2, 5.12
            (a)(1)(B)         5.13
            (a)(2)            Not Applicable
            (b)               5.8
            (c)               Not Applicable
Section 317 (a)(1)            5.3
</TABLE>

                                       6
<PAGE>

<TABLE>
<S>                           <C>
            (a)(2)            5.4
            (b)               12.4
Section 318                   1.6
</TABLE>

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

Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
      part of the Indenture.

                                       7Asset Purchase Agreement

 

Exhibit 10.31

Execution Copy

ASSET PURCHASE AGREEMENT

Dated as of June 6, 2005

among

EH/TRANSEASTERN, LLC, a Delaware limited liability company

(“Buyer”)

and

TRANSEASTERN PROPERTIES, INC., a Florida corporation,

each of the Companies listed on the signature pages hereto

(collectively, the “Sellers”)

and

each of Arthur J. Falcone and Edward W. Falcone

and

Falcone/Ritchie LLC, a Florida limited liability company

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Article I DEFINITIONS AND INTERPRETATION
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	1.2 Interpretation
	 	 	13	 
	1.3 Certain Other Definitions
	 	 	14	 
	 
	 	 	 	 
	Article II PURCHASE AND SALE
	 	 	15	 
	2.1 Purchased/Contributed Assets
	 	 	15	 
	2.2 Excluded Assets
	 	 	15	 
	2.3 Assumed Liabilities
	 	 	15	 
	2.4 Excluded Liabilities
	 	 	16	 
	 
	 	 	 	 
	Article III PURCHASE PRICE
	 	 	18	 
	3.1 Purchase Price
	 	 	18	 
	3.2 Determination of Estimated Purchase Price
	 	 	18	 
	3.3 Determination of Purchase Price
	 	 	18	 
	3.4 Adjustment
	 	 	20	 
	3.5 Allocation of Purchase Price
	 	 	20	 
	3.6 Post-Closing Payments
	 	 	20	 
	3.7 Proration of Taxes
	 	 	22	 
	 
	 	 	 	 
	Article IV CLOSING
	 	 	23	 
	4.1 Closing Date
	 	 	23	 
	4.2 Payment on the Closing Date
	 	 	23	 
	4.3 Buyer’s Additional Deliveries
	 	 	23	 
	4.4 Sellers’ Deliveries
	 	 	24	 
	4.5 Governmental Permits
	 	 	26	 
	4.6 Option Lots
	 	 	27	 
	4.7 Falcone/Ritchie
	 	 	27	 
	4.8 Assignment of Developer/Declarant Rights
	 	 	27	 
	4.9 FIRPTA Certificate
	 	 	27	 
	4.10 Other Deliverables
	 	 	27	 
	 
	 	 	 	 
	Article V REPRESENTATIONS AND WARRANTIES OF SELLERS
	 	 	28	 
	5.1 Organization and Authority of Sellers; No Conflict
	 	 	28	 
	5.2 Subsidiaries and Investments
	 	 	29	 
	5.3 Assets Generally
	 	 	29	 
	5.4 Financial Statements
	 	 	30	 
	5.5 Operations Since Balance Sheet Date
	 	 	30	 
	5.6 No Undisclosed Liabilities
	 	 	32	 
	5.7 Taxes
	 	 	32	 
	5.8 Availability of Assets
	 	 	33	 
	5.9 Governmental Permits
	 	 	33	 
	5.10 Real Property
	 	 	35	 
	5.11 Personal Property
	 	 	39	 
	5.12 Intellectual Property; Software
	 	 	39	 
	5.13 Work in Progress
	 	 	41	 
	5.14 Title to Property
	 	 	41	 

(i)

 

 

	 	 	 	 	 
	5.15 Employees and Related Agreements; ERISA
	 	 	41	 
	5.16 Employee Relations
	 	 	44	 
	5.17 Contracts
	 	 	44	 
	5.18 Status of Contracts
	 	 	46	 
	5.19 No Violation or Litigation
	 	 	46	 
	5.20 Environmental Matters
	 	 	47	 
	5.21 Insurance
	 	 	49	 
	5.22 Major Suppliers
	 	 	50	 
	5.23 Projections
	 	 	50	 
	5.24 Warranties; Construction Defects
	 	 	50	 
	5.25 No Finder
	 	 	51	 
	5.26 Reserved
	 	 	51	 
	5.27 Bank Accounts; Power of Attorney; Minute Books
	 	 	51	 
	5.28 Related Party and Other Transactions
	 	 	52	 
	5.29 Patriot Act
	 	 	52	 
	5.30 RESPA
	 	 	53	 
	5.31 Interstate Land Sales Full Disclosure Act
	 	 	53	 
	5.32 Coastal Construction Control Line
	 	 	54	 
	5.33 Homeowners’ Associations; Condominium Associations
	 	 	54	 
	5.34 Community Development Districts
	 	 	55	 
	5.35 Florida Uniform Land Sales Practices Law
	 	 	55	 
	5.36 No Restrictions
	 	 	55	 
	5.37 Compliance With Requirements of Law
	 	 	55	 
	5.38 Books and Records
	 	 	56	 
	5.39 Accounts Receivable
	 	 	56	 
	5.40 Sellers’ Names
	 	 	56	 
	5.41 Disclosure
	 	 	56	 
	 
	 	 	 	 
	Article VI REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	56	 
	6.1 Organization of Buyer
	 	 	56	 
	6.2 Authority of Buyer; No Conflict
	 	 	57	 
	6.3 No Finder
	 	 	57	 
	6.4 Financing
	 	 	57	 
	6.5 Ownership
	 	 	57	 
	 
	 	 	 	 
	Article VII ACTIONS PRIOR TO THE CLOSING DATE
	 	 	58	 
	7.1 Investigation by Buyer
	 	 	58	 
	7.2 Preserve Accuracy of Representations and Warranties; Notification of Certain Matters
	 	 	58	 
	7.3 Consents of Third Parties
	 	 	58	 
	7.4 Operations Prior to the Closing Date
	 	 	59	 
	7.5 Licenses
	 	 	61	 
	7.6 Minimum Lot Transfer
	 	 	61	 
	7.7 Title Insurance
	 	 	61	 
	7.8 Warranty Administration
	 	 	62	 
	7.9 Acquisition Proposals
	 	 	62	 
	7.10 Legal Descriptions
	 	 	63	 
	 
	 	 	 	 
	Article VIII ADDITIONAL AGREEMENTS
	 	 	63	 
	8.1 Covenant Not to Compete or Solicit Business
	 	 	63	 
	8.2 Release of Bonds
	 	 	65	 
	8.3 Taxes
	 	 	65	 

(ii)

 

 

	 	 	 	 	 
	8.4 Employees
	 	 	67	 
	8.5 Employee Benefit Plans
	 	 	68	 
	8.6 Use of Name
	 	 	69	 
	8.7 Filings with Governmental Bodies
	 	 	69	 
	8.8 First Florida Title Company
	 	 	69	 
	8.9 Cooperation on Bronson, Cummer, Heller and Independence Projects
	 	 	69	 
	8.10 Coral Lakes Construction
	 	 	70	 
	8.11 Life Insurance
	 	 	70	 
	8.12 Maintenance of Net Worth
	 	 	70	 
	8.13 Cummer
	 	 	70	 
	8.14 Cummer 1044
	 	 	70	 
	8.15 Kendall Commons (Vizcaya)
	 	 	70	 
	 
	 	 	 	 
	Article IX CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
	 	 	71	 
	9.1 No Misrepresentation or Breach of Covenants and Warranties
	 	 	71	 
	9.2 No Changes or Destruction of Property
	 	 	71	 
	9.3 No Restraint or Litigation
	 	 	71	 
	9.4 Necessary Governmental Approvals
	 	 	71	 
	9.5 Necessary Consents
	 	 	71	 
	9.6 Minimum Net Worth
	 	 	71	 
	9.7 Closing Deliveries
	 	 	72	 
	9.8 Approval by Shareholders or Members of Sellers
	 	 	72	 
	9.9 Releases
	 	 	72	 
	9.10 Environmental Report
	 	 	72	 
	9.11 Cummer West Property
	 	 	72	 
	9.12 Coral Lakes
	 	 	72	 
	9.13 Payments of Accounts Receivable
	 	 	72	 
	9.14 CMI Marketing
	 	 	73	 
	9.15 Employment Matters
	 	 	73	 
	9.16 Cummer 1400 Property
	 	 	73	 
	9.17 Live Oak
	 	 	73	 
	9.18 Construction on Lots
	 	 	73	 
	9.19 Cooperation Agreements
	 	 	73	 
	 
	 	 	 	 
	Article X CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
	 	 	73	 
	10.1 No Misrepresentation or Breach of Covenants and Warranties
	 	 	73	 
	10.2 No Restraint or Litigation
	 	 	74	 
	10.3 Closing Deliveries
	 	 	74	 
	10.4 Minimum Net Worth
	 	 	74	 
	10.5 Financing
	 	 	74	 
	10.6 Cooperation Agreements
	 	 	74	 
	 
	 	 	 	 
	Article XI INDEMNIFICATION AND POST-CLOSING REMEDIES
	 	 	74	 
	11.1 Indemnification by Sellers
	 	 	74	 
	11.2 Indemnification by Buyer
	 	 	77	 
	11.3 Notice of Claims
	 	 	78	 
	11.4 Loss Calculation
	 	 	79	 
	11.5 Third Person Claims
	 	 	79	 
	11.6 Adjustment to Purchase Price
	 	 	80	 
	11.7 Failure to Make Certain Payments
	 	 	80	 
	11.8 Exclusive Remedies
	 	 	80	 

(iii)

 

 

	 	 	 	 	 
	Article XII TERMINATION AND PRE-CLOSING REMEDIES
	 	 	80	 
	12.1 Termination
	 	 	80	 
	12.2 Notice of Termination
	 	 	81	 
	12.3 Effect of Termination; Remedies; Treatment of the Deposit
	 	 	81	 
	12.4 Special Termination
	 	 	82	 
	 
	 	 	 	 
	Article XIII GENERAL PROVISIONS
	 	 	83	 
	13.1 Survival of Obligations
	 	 	83	 
	13.2 Confidential Nature of Information
	 	 	83	 
	13.3 No Public Announcement
	 	 	83	 
	13.4 Notices
	 	 	84	 
	13.5 Successors and Assigns; No Third Party Beneficiaries
	 	 	84	 
	13.6 Access to Records after Closing
	 	 	85	 
	13.7 Entire Agreement; Amendments
	 	 	85	 
	13.8 Partial Invalidity
	 	 	86	 
	13.9 Waivers
	 	 	86	 
	13.10 Expenses
	 	 	86	 
	13.11 Execution in Counterparts
	 	 	86	 
	13.12 Enforcement of Agreement
	 	 	86	 
	13.13 Further Assurances; Power of Attorney
	 	 	86	 
	13.14 Sellers’ Representative
	 	 	87	 
	13.15 Governing Law; Jurisdiction
	 	 	87	 
	13.16 Time is of the Essence
	 	 	87	 
	13.17 Radon Gas
	 	 	88	 
	13.18 Titles and Subtitles
	 	 	88	 
	13.19 Legal Representation of the Parties
	 	 	88	 
	13.20 Disclosure
	 	 	88	 
	13.21 Laguna Lakes
	 	 	88	 

Exhibits:

	 	 	 	 	 
	Exhibit A

	 	-
	 	Form of Opinion of Counsel to Buyer
	Exhibit B

	 	-
	 	Form of Opinion of Counsel to Sellers
	Exhibit C

	 	-
	 	Form of Pay-Off Letter
	Exhibit D

	 	-
	 	Form of Indemnity Letter of Credit
	Exhibit E

	 	-
	 	Form of Assignment and Assumption Agreement
	Exhibit E-1

	 	-
	 	Form of Assignment and Assumption of Contracts
	Exhibit E-2

	 	-
	 	Form of Assignment and Assumption of Leases
	Exhibit F

	 	-
	 	Form of Bill of Sale
	Exhibit G

	 	-
	 	Form of Assignment of Option Documents
	Exhibit H

	 	-
	 	Form of Assignment of Developer/Declarant Rights
	Exhibit I

	 	-
	 	Form of Employment Agreement (Division President)
	Exhibit I-1

	 	-
	 	Form of Employment Letter (Division Manager)
	Exhibit J

	 	-
	 	Form of Right of First Offer Agreement
	Exhibit K

	 	-
	 	Form of Warranty Administration Agreement
	Exhibit L

	 	-
	 	Cummer 1400 Property
	Exhibit M

	 	-
	 	Cummer West Property
	Exhibit N

	 	-
	 	Form of Copyright Assignment
	Exhibit O

	 	-
	 	Form of Trademark and Domain Name Assignment
	Exhibit P

	 	-
	 	Definition of Fully Entitled

(iv)

 

 

	 	 	 	 	 
	Exhibit Q

	 	-
	 	Form of Promissory Note

(v)

 

 

SCHEDULES:

	 	 	 
	Schedule	 	Name
	Schedule 2.1

	 	Contributed Assets
	Schedule 2.2

	 	Excluded Assets
	Schedule 2.3(A)

	 	Assumed Liabilities: Customer Deposits and Accounts Payable
	Schedule 2.3(C)

	 	Assumed Liabilities: Obligations Under Roadway Improvement
	 

	 	Agreements, Utility Agreements, etc.
	Schedule 2.3(E)

	 	Assumed Liabilities: Obligations for Payment of Sales Commissions
	Schedule 2.3(F)

	 	Assumed Liabilities: Obligations Under Seller Agreements Post-Closing
	Schedule 2.3(G)

	 	Purchase Orders
	Schedule 2.3(H)

	 	Cable Communities
	Schedule 2.4

	 	Excluded Liabilities
	Schedule 3.1(B)

	 	List of Indebtedness
	Schedule 3.5

	 	Allocation Schedule
	Schedule 3.6(A)

	 	Earn-Out Payments
	Schedule 3.6(B)

	 	Entitlement Payments
	Schedule 4.2

	 	Wire Instructions
	Schedule 5.1(A)

	 	Companies
	Schedule 5.1(C)

	 	Required Consents
	Schedule 5.2

	 	Subsidiaries and Investments
	Schedule 5.4

	 	Financial Statements
	Schedule 5.5(A)

	 	Operations since Balance Sheet Date (No Material Adverse Change)
	Schedule 5.5(B)

	 	Operations since Balance Sheet Date (Ordinary Course Transactions)
	Schedule 5.6

	 	No Undisclosed Liabilities
	Schedule 5.7(B)

	 	Tax Returns Filed
	Schedule 5.7(C)

	 	Tax Audits
	Schedule 5.7(D)

	 	Other Taxes
	Schedule 5.9(A)

	 	Owned Property Governmental Permits
	Schedule 5.9(B)

	 	Obligations Re: Owned Governmental Permits
	Schedule 5.9(D)

	 	Option Governmental Permits
	Schedule 5.9(E)

	 	Obligations Re: Option Property Governmental Permits
	Schedule 5.10(A)

	 	Owned Real Property
	Schedule 5.10(B)

	 	Optioned Real Property
	Schedule 5.10(C)

	 	Obligations re: Owned Real Property
	Schedule 5.10(D)

	 	Leased Real Property
	Schedule 5.10(E)

	 	Real Property Pending Suits
	Schedule 5.10(H)

	 	Improvements
	Schedule 5.10(I)

	 	Concurrency Requirements
	Schedule 5.10(K)

	 	Lessees or Tenants at Sufferance
	Schedule 5.10(M)

	 	Developer-Related Fees and Impact Fees
	Schedule 5.10(P)

	 	Environmental Protection Agency Matters
	Schedule 5.10(R)

	 	Zoning Proceedings
	Schedule 5.10(W)

	 	Historical or Archeological Materials
	Schedule 5.10(X)

	 	Critical Habitat (Endangered Species Act)
	Schedule 5.11(A)

	 	Personal Property – Machinery or Equipment
	Schedule 5.11(B)

	 	Personal Property – Leases
	Schedule 5.12(A)

	 	Intellectual Property
	Schedule 5.12(B)

	 	Software

(vi)

 

 

	 	 	 
	Schedule	 	Name
	Schedule 5.12(C)

	 	Contracts, Licenses, Sublicenses, Assignments
	Schedule 5.12(D)

	 	Intellectual Property Encumbrances
	Schedule 5.12(E)

	 	Registrations for Copyrights, Patent Rights and Trademarks
	Schedule 5.12(F)

	 	Infringements, Misappropriations, Violations
	Schedule 5.12(G)

	 	Limitations on Transfer and Assignment
	Schedule 5.12(H)

	 	Work for Hire
	Schedule 5.13

	 	Stop Work Orders
	Schedule 5.14

	 	Permitted Encumbrances
	Schedule 5.15(A)

	 	Seller Non-ERISA Plans
	Schedule 5.15(B)

	 	Seller Compensation Commitments
	Schedule 5.15(D)

	 	Seller Plans
	Schedule 5.15(K)

	 	Sellers’ Employees
	Schedule 5.15(L)

	 	Conflict of Interest Transactions
	Schedule 5.15(M)

	 	Severance and Other Termination Matters
	Schedule 5.16

	 	Employee Relations
	Schedule 5.17

	 	Contracts
	Schedule 5.18

	 	Status of Contracts
	Schedule 5.19

	 	No Violation or Litigation
	Schedule 5.20

	 	Environmental Matters
	Schedule 5.21

	 	Insurance
	Schedule 5.23

	 	Projections
	Schedule 5.24(A)

	 	Warranty Matters
	Schedule 5.24(B)

	 	Home Repurchases
	Schedule 5.27

	 	Bank Accounts; Power of Attorney
	Schedule 5.28(A)

	 	Related Party and Other Transactions
	Schedule 5.30(B)

	 	RESPA
	Schedule 5.30(E)

	 	Specimen Copies of Purchase and Sale Agreements
	Schedule 5.31

	 	Interstate Land Sales Full Disclosure Act
	Schedule 5.33

	 	Homeowners’ Associations
	Schedule 5.35

	 	Florida Uniform Land Sales Practices Law
	Schedule 5.36

	 	No Restrictions
	Schedule 5.37

	 	Notices from Governmental Bodies
	Schedule 5.39

	 	Accounts Receivable
	Schedule 7.4(b)(xii)

	 	Cash Payments or Distributions of Assets to Sellers
	Schedule 7.6

	 	Lot Count
	Schedule 8.1(A)

	 	List of Counties where TEP Operates
	Schedule 8.1(B)

	 	List of Counties Subject to Non-Compete
	Schedule 8.1(C)

	 	List of Projects Excluded from Non-Compete
	Schedule 8.2

	 	Release of Bonds
	Schedule 10.5

	 	Financing Term Sheet
	Schedule 12.4

	 	Terms of TEP’s Investment

(vii)

 

 

THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S INTENTION TO CANCEL
WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS AGREEMENT BY BUYER, AND RECEIPT BY BUYER OF ALL
OF THE ITEMS REQUIRED TO BE DELIVERED TO BUYER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA
STATUTES. THIS AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S
INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT
WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS ADVERSE TO BUYER. ANY
PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR
CLOSING FOR A PERIOD OF NOT MORE THAN 15 DAYS AFTER BUYER HAS RECEIVED ALL OF THE ITEMS REQUIRED.
BUYER’S RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.

ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE
DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THIS AGREEMENT AND THE
DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER
OR LESSEE.

ASSET PURCHASE AGREEMENT

     ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of June 6, 2005, by and among
EH/TRANSEASTERN, LLC, a Delaware limited liability company (“Buyer”), and TRANSEASTERN
PROPERTIES, INC., a Florida corporation (“TEP”), each of the limited liability companies or
corporations, as the case may be, listed on the signature pages hereto (the “Companies”,
together with TEP, the “Sellers”), each of Arthur J. Falcone and Edward W. Falcone
(collectively, “Falcone”) with respect solely to Sections 5.10(dd),
8.1 and 8.11, as applicable, and Falcone/Ritchie LLC, a Florida limited liability
company with respect to 2.1 and 12.4, (“Falcone/Ritchie LLC”).

RECITALS:

     WHEREAS, Sellers are engaged, directly or indirectly, as the case may be, in the businesses of
(a) acquiring and developing land on which Sellers build and market homes and (b) homebuilding,
including obtaining relevant land use approvals and permits; overseeing the work of subcontractors;
construction, marketing and selling Lots and single family residences, townhomes, and condominium
units; overseeing warranty work; and other matters reasonably related to the land development and
homebuilding businesses, in each case solely in the counties specified in Schedule 8.1(A)
(the “Business”);

     WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to acquire from Sellers, either by
outright purchase or by the contribution of certain assets by Falcone/Ritchie LLC to TE/TOUSA, LLC,
in exchange for fifty percent (50%) of the membership interests in TE/TOUSA, LLC, substantially all
of the assets, properties and business of Sellers used in connection with the Business on the terms
and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth,
the parties to this Agreement agree as follows:

 

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

     1.1 Definitions. In this Agreement, the following terms have the meanings specified or
referred to in this Section 1.1 and shall be equally applicable to both the singular and
plural forms.

     “Accounts Receivable” means all accounts or notes receivable of Sellers and the full
benefit of all security for such accounts or notes, including draws against commissions and
receivables from homeowners’ associations and any claim, remedy or other right related to any of
the foregoing; provided, however, that none of the foregoing shall be deemed to
include any receivables from any of Sellers’ Affiliates, any of Sellers’ intercompany receivables
or any receivables from Sellers’ related parties (including any officers or directors of Sellers).

     “Accounting Firm” has the meaning specified in Section 3.3(d).

     “Affiliate” means, with respect to any Person, any other Person which, at the time of
determination, directly or indirectly through one or more intermediaries, Controls, is Controlled
by or is under Common Control with such Person and for each natural Person (a) his or her spouse,
(b) his or her lineal descendant or antecedent, brother, sister, aunt, uncle, cousin, niece or
nephew, as well as the spouse of any of the foregoing, and (c) any custodian or trustee for the
account of the Person. As to any corporation, limited liability company, trust or partnership, any
person with any of the foregoing relationships to any person in control of such entity as general
partner, member, shareholder, trustee or otherwise shall be deemed to be an Affiliate of such
entity.

     “Agreed Accounting Principles” means GAAP consistently applied, including, but not
limited to, all appropriate accruals; provided that, with respect to any matter as to which
there is more than one generally accepted accounting principle, Agreed Accounting Principles means
the generally accepted accounting principles applied in the preparation of the Audited Financial
Statements.

     “Agreed Adjustments” has the meaning specified in Section 3.3(c).

     “Allocation Schedule” has the meaning specified in Section 3.5.

     “Ancillary Agreements” means the Buyer Ancillary Agreements and the Seller Ancillary
Agreements.

     “Antitrust Division” means the Antitrust Division of the United States Department of
Justice.

     “Assigned Permits” has the meaning specified in Section 4.5.

     “Assignment and Assumption Agreement” has the meaning specified in Section
4.4(p).

     “Assignment and Assumption of Contracts” has the meaning specified in Section
4.4(q).

     “Assignment and Assumption of Leases” has the meaning specified in Section
4.4(r).

     “Assignment of Developer/Declarant Rights” has the meaning specified in Section
4.8.

     “Assumed Liabilities” has the meaning specified in Section 2.3.

 

 

     “ASTM Guidelines” means the following ASTM International Standards: E1527-00
Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment
Process; E1528-00 Standard Practice for Environmental Site Assessments: Transaction Screen Process;
E1903-97(2002) Standard Guide for Environmental Site Assessments: Phase II Environmental Site
Assessment Process; and related ASTM Standards and Guidelines, as the same may be amended from time
to time.

     “Balance Sheet” means the unaudited consolidated balance sheet of Sellers, as adjusted
to take account of the Excluded Assets and Excluded Liabilities, as of the Balance Sheet Date.

     “Balance Sheet Date” means February 28, 2005.

     “Bill of Sale” means that certain bill of sale, substantially in the form attached
hereto as Exhibit F, to be executed and delivered on the Closing Date among Buyer and
Sellers, whereby Sellers convey to Buyer all personal property, whether tangible or intangible,
except those specified in Section 2.2.

     “Business” has the meaning specified in the first recital of this Agreement.

     “Business Day” means any day other than a Saturday, Sunday or a day on which banks in
Broward County, Florida are permitted or required to be closed.

     “Buyer” has the meaning specified in the first paragraph of this Agreement.

     “Buyer Ancillary Agreements” means all agreements, instruments and documents being or
to be executed and delivered by Buyer under this Agreement or in connection herewith.

     “Buyer Group Member” means (i) Buyer and its Affiliates and (ii) the equity holders,
directors, officers, employees, agents and representatives of each of Buyer and its Affiliates.

     “CERCLA” means the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. 9601 et seq.

     “Charter Document” means the Certificate or Articles of Incorporation (in the case of
a corporation) or Certificate or Articles of Formation or equivalent instrument (in the case of a
limited liability company).

     “Claim Notice” has the meaning specified in Section 11.3.

     “Clean Air Act” means the Clean Air Act, 33 U.S.C. 7401 et seq.

     “Clean Water Act” means the Clean Water Act, 33 U.S.C. 1251 et seq.

     “Closing” means the closing of the transfer of the Purchased Assets from Sellers to
Buyer.

     “Closing Agent” means Greenberg Traurig, P.A.

     “Closing Date” has the meaning specified in Section 4.1.

     “Closing Date Balance Sheet” has the meaning specified in Section 3.3(b).

3

 

     “Closing Date Net Worth” means the excess of the Purchased Assets over the sum of (i)
the Assumed Liabilities reflected in the Closing Date Balance Sheet and (ii) without duplication,
the amount necessary to retire the obligations listed in Schedule 3.1(B).

     “Code” means the Internal Revenue Code of 1986.

     “Companies” are the entities listed on the signature pages hereto.

     “Contaminant” shall be construed broadly to mean and include pollutants, hazardous
substances, hazardous wastes, solid waste, biomedical waste, asbestos, flammable materials,
explosives, radioactive or nuclear substances, polychlorinated biphenyls, other carcinogens, oil
and other petroleum products, radon gas, methane gas, urea formaldehyde, Mold, chemicals, gases, or
solvents that could be a detriment or pose a danger to the environment or to the health or safety
of any Person or that is otherwise defined, governed, and/or regulated by or pursuant to any
Environmental Law.

     “Contributed Assets” means the assets listed on Schedule 2.1, which shall be
deemed contributed by Falcone/Ritchie LLC to TE/TOUSA, LLC (or to Buyer, at the direction of
TE/TOUSA, LLC), in exchange for fifty percent (50%) of the membership interests in TE/TOUSA, LLC.

     “Control” means, as to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. The terms “Controlled by,” “under Common Control with” and “Controlling”
shall have correlative meanings.

     “Copyrights” means United States and non-U.S. copyrights, copyrightable works and mask
works (as defined in 17 U.S.C. ‘901), whether registered or unregistered, and pending applications
to register the same.

     “Court Order” means any judgment, order, award or decree of any United States federal,
state or local, or any supra-national or non-U.S., court or tribunal and any award in any
arbitration Proceeding.

     “Cummer 1400 Property” means the Real Property described in Exhibit L attached
hereto.

     “Cummer West Property” means the Real Property described in Exhibit M attached
hereto.

     “Deposit” has the meaning specified in Section 3.1.

     “Division” means every area in the State of Florida where Sellers conduct Business,
including Jacksonville, Orlando, Southeast Florida, Southwest Florida and Tampa.

     “Employment Agreement” means any employment agreement between Buyer and Neil Eisner,
Jan Ickovic, any Division President or Division Manager specified by Buyer, substantially in the
forms attached hereto as Exhibit I, Exhibit I-1 or as agreed by Buyer and such
other party.

     “Encumbrance” means any lien (statutory or other), claim, charge, security interest,
mortgage, deed of trust, pledge, hypothecation, assignment, special assessments, easements,
reservations, restrictions, conditional sale or other title retention agreement, preference,
priority or other security agreement or preferential arrangement of any kind.

     “Endangered Species Act” means the Endangered Species Act of 1973, 16 U.S.C. 1531
et seq.

4

 

     “Entitlement Payment” has the meaning specified in Section 3.6(b).

     “Environmental Encumbrance” means an Encumbrance in favor of any Governmental Body (i)
for any liability under any Environmental Law; (ii) for damages arising from, or costs incurred by
such Governmental Body in response to, a Release or threatened Release of a Contaminant into the
environment; or (iii) in connection with any environmental engineering control or environmental
institutional control utilized to secure a conditional No Further Action letter or a conditional
Site Rehabilitation Completion Order.

     “Environmental Law” means all Requirements of Laws derived from or relating to all
non-U.S., federal, state and local laws or regulations relating to or addressing the environment,
health, safety, wetlands, jurisdictional waters, and/or threatened or endangered species, including
the Clean Water Act, the Clean Air Act, the Endangered Species Act, CERCLA, OSHA and RCRA and any
state equivalent thereof including, but not limited to, Florida Statutes Chapters 161, 163, 373,
376, 380 and 403 and the rules promulgated thereunder and codified in the Florida Administrative
Code.

     “Environmental Stage I Work” has the meaning specified in Section 5.20(p), and
shall include Phase I work.

     “Environmental Stage II Work” has the meaning specified in Section 5.20(p),
and shall include Phase II work.

     “Environmental Stage III Work” has the meaning specified in Section 5.20(p),
and shall include Phase III work.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “Escrow Agent” means Chicago Title Insurance Company.

     “Estimated Purchase Price” means the Purchase Price, as defined herein, but determined
on an estimated basis by Sellers in good faith and as reflected in the certificate referred to in
Section 3.2.

     “Executive Order” has the meaning specified in Section 5.29(a).

     “Excluded Assets” has the meaning specified in Section 2.2.

     “Excluded Liabilities” has the meaning specified in Section 2.4.

     “Expenses” means any and all out-of-pocket expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or Proceeding incident to any matter
indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert
witnesses, consultants, accountants and other professionals).

     “Financial Statements” has the meaning specified in Section 5.4.

     “Force Majeure Event” means an act of God (including hurricanes), acts or newly
adopted regulations of Governmental Bodies, wars, accidents, floods, fires, embargos, riots,
strikes or industrial disputes, but excluding increases in prices of construction materials,
including mechanical and appliance components of a home.

5

 

     “Florida Uniform Land Sales Practices Law” means the Uniform Land Sales Practices Law,
Florida Statutes Chapter 498.

     “FTC” means the United States Federal Trade Commission.

     “Fully Entitled” has the meaning set forth on Exhibit P attached hereto with
respect to the projects listed on such exhibit.

     “GAAP” means accounting principles generally accepted in the United States on the date
hereof.

     “Governing Body” means the Board of Directors (in the case of a corporation) or
managing members (in the case of a limited liability company).

     “Governmental Body” means any United States federal, state or local, or any supra
national or non-U.S., government, political subdivision, governmental, regulatory or administrative
authority, instrumentality, agency body or commission, self-regulatory organization, court,
tribunal or judicial or arbitral body.

     “Governmental Permits” means, collectively, the Owned Property Governmental Permits
and the Option Governmental Permits.

     “Holdback Amount” has the meaning specified in Section 4.2.

     “Holdback Funds” means the sum to be delivered to the Escrow Agent at the Closing
pursuant to Section 4.2 together with any earnings or interest thereon from and after the
Closing.

     “Income Taxes” has the meaning specified in Section 8.3(f).

     “Indemnified Party” has the meaning specified in Section 11.3.

     “Indemnitor” has the meaning specified in Section 11.3.

     “Indemnity Letter of Credit” has the meaning specified in Section 4.4(l).

     “Intellectual Property” means Copyrights, Patent Rights, Trademarks and Trade Secrets.

     “Interstate Land Sales Full Disclosure Act” means The Interstate Land Sales Full
Disclosure Act, 15 U.S.C. § 1701 et seq.

     “IRS” means the Internal Revenue Service.

     “Knowledge” means (i) the actual knowledge or conscious awareness of any officer,
division president or division manager of any Seller of the facts or matters that each such Person
could reasonably be expected to discover or otherwise become aware of in the course of performing
their duties for Sellers or conducting the Business in the ordinary course and (ii) the actual
Knowledge or conscious awareness of any of Neil Eisner, John Evasius, Arthur J. Falcone, Edward W.
Falcone, Jan Ickovic, Evan Rabinowitz and Paul Leikert of the facts or matters that each such
Person could reasonably be expected to discover or otherwise become aware of in the course of
performing their duties for Sellers or conducting the Business and after due inquiry of the
officers, division presidents and division managers of Sellers.

     “Leased Real Property” has the meaning specified in Section 5.10(d).

6

 

     “Losses” means any and all losses, costs, obligations, liabilities, settlement
payments, awards, judgments, Taxes, fines, penalties, damages, deficiencies or other charges.

     “Lot” means a lawfully subdivided legal lot or condominium unit on or in which a
single family detached or attached home can be constructed and sold to the public.

     “Material Adverse Effect” or “Material Adverse Change” means any fact,
occurrence, condition, circumstance, change, effect or development, whether individually or in the
aggregate, that could reasonably be expected to be materially adverse to the Purchased Assets, the
Business or the assets, liabilities, equity, internal controls, profits, condition (financial or
otherwise), results of operations, prospects, cash flow or liquidity of the Business other than
those (i) generally affecting the industries in which Sellers operate or arising from changes in
general business or economic conditions; and (ii) resulting from any change in law or GAAP which
generally affect entities such as Sellers, since June 30, 2004.

     “Mold” means the subset of organisms of the fungi family, including but not limited
to, aspergillus, penicillium and stachybotrys, which may produce mycotoxins. The term “mold” also
includes any molds which are not currently toxic but may become toxic in the future.

     “Optioned Real Property” has the meaning specified in Section 5.10(b).

     “OSHA” means the Occupational Safety and Health Act, 29 U.S.C. § 651 et
seq.

     “Other Taxes” has the meaning specified in Section 8.3(f).

     “Owned Real Property” has the meaning specified in Section 5.10(a).

     “Owned Software” has the meaning specified in Section 5.12(g).

     “Patent Rights” means United States and non-U.S. patents, provisional patent
applications, patent applications, continuations, continuations-in-part, divisions, reissues,
patent disclosures, industrial designs, inventions (whether or not patentable or reduced to
practice) or improvements thereto.

     “Patriot Act” has the meaning specified in Section 5.29(a).

     “Permitted Encumbrances” means (i) liens for Taxes and other governmental charges and
assessments which are not yet due and payable; (ii) liens of landlords, carriers, warehousemen and
mechanics liens related to any Seller Agreement or any Assumed Liability arising in the ordinary
course of business for sums not yet due and payable; (iii) liens and other items specified in
Schedule 5.14; (iv) liens securing payment obligations under the bonds specified in
Schedule 8.2; (v) other liens or imperfections on property which do not adversely affect
title to, detract from the value of, or impair the existing use of, the property affected by such
lien or imperfection; and (vi) lien rights of contractors with respect to WIP.

     “Person” means any individual, corporation, partnership, business trust, joint
venture, limited liability company, association, joint-stock company, trust, unincorporated
organization or Governmental Body, other government or political subdivision or agent or
instrumentality thereof or other entity or organization.

     “Pre-Closing Warranty Claims” has the meaning specified in Section 7.8.

7

 

     “Preliminary Accounting Report” has the meaning specified in Section 3.3(a).

     “Preliminary Closing Date Balance Sheet” has the meaning specified in Section
3.3(a).

     “Preliminary Purchase Price” has the meaning specified in Section 3.3(a).

     “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or
informal, whether public or private) commenced, brought, conducted or heard by, before or on behalf
of, or otherwise involving, any Governmental Body or arbitrator.

     “Prohibited Person” has the meaning specified in Section 5.29(a).

     “Project” means a real estate development containing no fewer than one hundred (100)
Lots.

     “Purchase Price” has the meaning specified in Section 3.1.

     “Purchased Assets” means, other than Excluded Assets, all of the assets, properties,
rights, licenses, permits of Sellers as the same now exist (except to the extent transferred in the
ordinary course consistent with past practices prior to the Closing Date) or exists on the Closing
Date, wherever located, real, personal, or mixed, tangible or intangible, owned by, optioned by,
leased by or in the possession of any Seller, whether or not reflected in the books and records
thereof, and held or used exclusively in the Business (except to the extent transferred in the
ordinary course consistent with past practices prior to the Closing Date), and all assets of the
Business acquired by any Seller or any of its Affiliates, on or prior to the Closing Date and not
disposed of prior to the Closing Date in accordance with this Agreement, and including, without
limitation, except as otherwise specified herein, all direct or indirect, right, title, and
interest of any Seller or any of its Affiliates in, to and under:

          (a) all of the assets reflected on the Balance Sheet described in Section 5.4(iii);

          (b) all cash (including, restricted cash, deposits received from customers (whether or not
held in escrow), checking account balances, savings account balances, certificates of deposit, and
other time deposits and petty cash) and marketable and other securities net of overdrafts;

          (c) the right, title and interest of Sellers in the Seller Property; including all residential
Lots and rights to, and contracts for the purchase of land, development orders and other
entitlements;

          (d) the Intellectual Property and Software owned by Sellers;

          (e) the Seller Agreements, which are identified on the schedules hereto as being assigned to
Buyer;

          (f) all assets relating to the operation of Sellers’ design centers;

          (g) all of Sellers’ right to use architectural and engineering plans for the design and
construction of homes;

          (h) the Assigned Permits;

          (i) all Accounts Receivable and the full benefit of all security for such accounts or rights
to payment;

8

 

          (j) all promotional allowances, rebates and similar items;

          (k) the right to receive and retain mail, accounts receivable payments and other
communications relating to the Business;

          (l) all rights relating to earnest money deposits from homebuyers held in escrow or held by
any Seller or any Affiliate of any Seller or any third parties as well as any interest earned
thereon;

          (m) all insurance benefits, including rights and proceeds, arising from or relating to the
Purchased Assets or the Seller Agreements prior to the Closing, unless expended in accordance with
this Agreement;

          (n) all office supplies, production supplies, spare parts and other miscellaneous supplies,
materials or inventory of any kind wherever located, including, all property of any kind located in
any building, office or other space leased, owned or occupied by Sellers or in any warehouse where
any of Sellers’ properties and assets may be situated;

          (o) all rights relating to deposits or prepaid items made with or to Governmental Bodies by
Sellers or any Affiliate of Sellers as well as any interest earned thereon;

          (p) all rights, claims or causes of action against third parties relating to the assets,
properties, business or operations of Sellers with respect to the Business arising out of
transactions occurring prior to the Closing Date, solely with respect to the projects in which Lots
(or the rights to Lots) are being conveyed to Buyer and any matters as to which Buyer is entitled
to indemnification hereunder; and

          (q) all books and records (including all data and other information stored on discs, tapes or
other media) of Sellers relating to the assets, properties, business and operations of the
Business, including sales, advertising and marketing materials, provided that Sellers shall be
entitled to retain for their records originals of all of the foregoing.

     “RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq.

     “Real Property” means the Owned Real Property, the Contract Real Property, the
Optioned Real Property and the Leased Real Property.

     “Related Owners” has the meaning specified in Section 8.9.

     “Release” means any intentional or unintentional release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Property, including the movement
of Contaminants through or in the air, soil, surface water, groundwater or Real Property.

     “Remedial Action” means actions required to (i) clean up, remove, treat or in any
other way address Contaminants in the indoor or outdoor environment; (ii) prevent the Release or
threatened Release or minimize the further Release of Contaminants; or (iii) investigate and
determine if a remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.

     “Requirements of Laws” means any United States federal, state and local, and any
non-U.S., laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any

9

 

Governmental Body (including those pertaining to electrical, building, zoning, subdivision,
land use, environmental and occupational safety and health and real estate settlement requirements)
or common law.

     “RESPA” means the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2605
et seq.

     “Right of First Offer Agreement” means the Right of First Offer Agreement between
Buyer and Sellers substantially in the form attached hereto as Exhibit J.

     “Sellers” have the meaning specified in the first paragraph of this Agreement.

     “Seller Ancillary Agreements” means all agreements, instruments and documents being or
to be executed and delivered by any Seller under this Agreement or in connection herewith.

     “Seller Agreements” means all contracts, agreements, leases, licenses, commitments,
sales and purchase orders, and other undertakings of any kind, whether written or oral, relating
exclusively to the Business.

     “Seller Compensation Commitments” has the meaning specified in Section
5.15(b).

     “Seller ERISA Plans” has the meaning specified in Section 5.15(d).

     “Seller Group” shall mean any affiliated group (as defined in Section 1504(a) of the
Code without regard to the limitations contained in Section 1504(b) of the Code) that, at any time
on or before the Closing Date, includes or has included any Seller or any predecessor of or
successor to any Seller (or another such predecessor or successor), or any other group of
corporations that, at any time on or before the Closing Date, files or has filed Tax Returns on a
combined, consolidated or unitary basis with any Seller or any predecessor of or successor to any
Seller (or another such predecessor or successor).

     “Seller Group Member” means (i) any Seller and its Affiliates and (ii) the equity
holders, directors, officers, employees, agents and representatives of such Seller and its
Affiliates.

     “Seller Non-ERISA Plans” has the meaning specified in Section 5.15(a).

     “Seller Plans” has the meaning specified in Section 5.15(d).

     “Seller Property” means any real or personal property, plant, building, facility,
structure, underground storage tank, equipment or unit, or other asset used in the Business or
owned, leased or operated by, or under option to, any Seller or any predecessor thereto, including,
without limitation, the Owned Real Property, the Optioned Real Property and the Leased Real
Property.

     “Software” means computer software programs and software systems, including all
databases, compilations, tool sets, compilers, higher level or proprietary languages, related
documentation and materials, whether in source code, object code or human readable form.

     “Substitute Lot” shall mean any Lot in a Substitute Project.

     “Substitute Project” shall mean a Project not listed on Schedule 7.6 which
Sellers and Buyer agree shall be (i) an additional Project whose Lots shall be included in the Lots
for which Entitlement Payments are made to Sellers under Section 3.6(b) (an “Additional
Project”), (ii) a replacement for a Project whose Lots have not become Fully Entitled by June
30, 2010, (iii) a replacement for a Project for

10

 

which Sellers have been unable to obtain any consents required under Section 4.4(q) or
Section 4.6(b) (in either (ii) or (iii), a “Replaced Project”), (iv) any Lot “lost”
in Live Oak Phase II as a result of any action by a Governmental Body in connection with the
permitting process for such Projects or (iv) any Lot which shall be the subject of an Unresolved
Title Objection under Section 7.7(c). In order to reach an agreement on a Substitute
Project, the parties shall engage in the following process:

          (a) Sellers or Buyer shall notify the other in writing of any Replaced Project for which a
Substitute Project is proposed, specifying such Replaced Project or Replaced Projects and the
reason for substitution (the “Request Notice”);

          (b) Within thirty (30) days of issuing or receiving the Request Notice, Sellers shall propose
to Buyer in writing (the “Proposed Substitute Project Notice”) a Substitute Project in the
same market as the Replaced Project, or in a different market if acceptable to Buyer in its sole
and absolute discretion. The Substitute Project proposed by Sellers are intended to have a similar
Value as the Replaced Project;

          (c) (i) For purposes of this definition, in determining “Value,” in the case of a Replaced
Project, the parties shall be bound by (1) the value assigned to such Project as set forth on
Schedule 3.6(B), or if no value is assigned to such Project in Schedule 3.6(B),
then (2) the discounted net present value of the gross profit (as determined in accordance with the
accounting practices utilized by Sellers prior to the Closing Date) projected by the Projections to
be realized from the sale of completed homes on the Lots in such Project over the period of time
which the Projections forecast would be required to sell completed homes on all of the Lots in such
Replaced Project; provided that all net present value calculations to be performed under this
procedure shall be calculated at a discount rate of ten percent (10%) per annum, calculated on an
annual basis. In calculating the net present value, the parties shall also be bound by the sales
prices and gross margin amounts for such Project as shown in the Projections;

               (ii) For purposes of this definition, in determining “Value”, in the case of a Substitute
Project, the parties shall be bound by the discounted value of the gross profit (as determined in
accordance with the accounting practices utilized by Sellers prior to the Closing Date) projected
to be realized from the sale of completed homes on the Lots in such Project over a period of time
which would reasonably be expected to be required to sell completed homes on all of the Lots in
such Substitute Project. The parties shall also be bound by the sales prices and gross margin
amounts which Sellers have experienced in building and selling homes similar to the products which
Sellers have planned to offer for sale on lots similar in size to the Lots proposed in such
Substitute Project;

          (d) If Buyer does not agree that the proposed Substitute Project has the same Value as the
Replaced Project (or if Sellers and Buyer cannot agree on the difference in value (the “Value
Disparity”)), then Buyer shall so notify Sellers in writing within fourteen (14) days of
receipt of the Proposed Substitute Project Notice (the “Value Disparity Notice”). Within
seven (7) days of receipt of the Value Disparity Notice, Buyer and Sellers shall each engage an MAI
appraiser experienced in the market in which the proposed Replaced Project and Substitute Project
are located. The appraisers shall determine the Value of both the Replaced Project and the
proposed Substitute Project to determine the Value Disparity, in each case using the methodology
described in subparagraph (c) above. If the two appraisers’ determinations of the Value Disparity
between the Replaced Project and the proposed Substitute Project differ by less than five percent
(5%), the Value Disparity shall be the average of the two (2) determinations. If the
determinations differ by more than five percent (5%), then the two (2) appraisers shall engage a
third appraiser, whose determination of the Value Disparity shall be averaged with the other two
(2) valuations. Such third appraiser shall also determine the Value of both the Replaced Project
and the proposed Substitute Project to determine the Value Disparity, in each case using

11

 

the methodology described in subparagraph (c) above. Buyer and Sellers (collectively) shall
each be responsible for one-half of the fees and expenses of such appraisers;

          (e) Upon confirmation of the Value Disparity, if any, Buyer may elect either (i) to accept the
Proposed Substitute Project(s) and allow Sellers to propose additional Substitute Projects to
compensate for the amount of the Value Disparity, or (ii) to require Sellers to propose new
Substitute Projects, whereupon the process described above shall be followed with respect to the
new proposed Substitute Projects;

          (f) Once Buyer has made its election as set forth in (e) above, Buyer shall thereafter have a
period of forty (40) days in which to perform due diligence investigations of the proposed
Substitute Project for which any Value Disparity has been resolved. If Buyer is not satisfied with
the proposed Substitute Project in its sole and absolute discretion, then Buyer may elect either
(i) to accept the proposed Substitute Project, or (ii) to require Sellers to propose new Substitute
Projects, whereupon the process described above shall be followed with respect to the new proposed
Substitute Project;

          (g) Once Buyer has elected to proceed with the proposed Substitute Project, then such Project
shall be deemed to be “Project” for all purposes hereunder;

          (h) Notwithstanding anything herein to the contrary, no provision of a Substitute Project
shall relieve Sellers of their obligation to offer the Three Thousand (3,000) Lots under the Right
of First Offer Agreement as specified on Schedule 7.6; and

          (i) In the event that some, but not all, of the Lots in a Project listed on Schedule
3.6(b) shall fail to become Fully Entitled, Sellers shall be entitled to propose to Buyer an
Additional Project which contains Lots which are or will be Fully Entitled. Any individual Lots or
group of Lots from a Project listed on Schedule 3.6(b) which do not become Fully Entitled
by June 30, 2010 may be replaced by Lots in an Additional Project. Upon the acceptance of such
replacement Lots, Sellers shall be entitled to receive payment of an Entitlement Payment for such
Lot, calculated and payable in the same manner set forth herein.

     “Tax” (and, with correlative meaning, “Taxes”) shall mean: (i) any federal,
state, local or foreign net income, gross income, gross receipts, windfall profit, severance,
property, production, sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax
(including taxes under Code Section 59A), or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or penalty, addition
to tax or additional amount imposed by any governmental authority; and (ii) any liability of
Sellers for the payment of amounts with respect to payments of a type described in clause (i) as a
result of being a member of an affiliated, consolidated, combined or unitary group, or as a result
of any obligation of any Seller under any Tax Sharing Arrangement or tax indemnity arrangement.

     “Tax Return” means any return, report or similar statement required to be filed with
respect to any Taxes (including any attached schedules), including any information return, claim
for refund, amended return or declaration of estimated Tax.

     “Tax Sharing Arrangement” means any written or unwritten agreement or arrangement for
the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Tax Return which Tax Return includes or included any Seller.

     “TEP” has the meaning specified in the first paragraph of this Agreement.

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     “Third Person Claim” has the meaning specified in Section 11.3.

     “Title Company” has the meaning specified in Section 7.7(a).

     “Trademarks” means United States, state and non-U.S. trademarks, service marks, trade
names, Internet domain names, URL’s, designs, logos, slogans, project names, home model names and
general intangibles of like nature, whether registered or unregistered, and pending registrations
and applications to register the foregoing, together with all common law rights and the goodwill of
the business associated therewith.

     “Trade Secrets” means confidential ideas, trade secrets, know-how, concepts, methods,
processes, formulae, technology, algorithms, models, reports, data, customer lists, supplier lists,
mailing lists, business plans, or other proprietary information.

     “Unentitled Lot” means a Lot that is included within the Owned Real Property or
Optioned Real Property but is not Fully Entitled as of the Closing.

     “WARN” has the meaning specified in Section 5.16.

     “Warranty Administration Agreement” means the Warranty Administration Agreement
between Buyer and Sellers substantially in the form attached hereto as Exhibit K.

     1.2 Interpretation. For purposes of this Agreement (i) the words include, includes,
and including shall be deemed to be followed by the words without limitation; (ii) the word or is
not exclusive; (iii) the words herein, hereof, hereby, hereto and hereunder refer to this Agreement
as a whole; and the words home and homes refer to residential dwelling units, whether detached,
attached, fee simple or condominium, which are intended to be marketed by the builder or developer
thereof for sale, rather than as rental units; (iv) the singular shall include the plural and vice
versa; and (v) the feminine, masculine and neuter genders shall be interchangeable. Unless the
context otherwise requires, references herein (i) to Articles, Sections, Exhibits and Schedules
mean the Articles and Sections of, and the Exhibits and Schedules attached to, this Agreement; and
(ii) to a statute means such statute as amended from time to time and any regulations promulgated
thereunder. The Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth verbatim herein;
provided, however, that Sellers may, at any time prior to Closing, by written
notice to Buyer, amend any of Schedules 2.1, 2.3(A), 2.3(C),
2.3(E), 2.3(F), 2.3(G), 3.1(B), 5.9(A), 5.9(D),
5.17(I)(A), 5.27 and 5.39 to make such Schedules consistent with the
representations and warranties set forth in this Agreement by reflecting any transactions entered
into after the execution of this Agreement. Upon receipt by Buyer of such notice, such amended
Schedule shall become a part of this Agreement. No amendments may be made to any Schedules where
such amendment would result in a violation of Section 7.4. Titles to Articles and headings
of Sections are inserted for convenience of reference only and shall not be deemed a part of or to
affect the meaning or interpretation of this Agreement. This Agreement and the Ancillary
Agreements shall be construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any instrument to be drafted.

13

 

     1.3 Certain Other Definitions. The following terms are defined in the Sections of the
Agreement indicated:

	 	 	 	 	 
	Term	 	Section	 
	Additional Projects
	 	 	1.1	 
	ACOE
	 	 	9.17	 
	Affiliated Business Arrangement Disclosure Statement
	 	 	5.30	(b)
	Agreement
	 	Preamble
	Assignment of Option Documents
	 	 	4.6	(b)
	Associations
	 	 	5.33	 
	Audited Financial Statements
	 	 	5.4	 
	Change of Control
	 	 	3.6	(a)
	Closing Date Certificate
	 	 	3.6	(b)
	Competing Business
	 	 	5.28	(a)
	Condominium Projects
	 	 	5.33	 
	Continued Welfare Plans
	 	 	8.5	(b)
	Contract Real Property
	 	 	5.10	(c)
	Controlled Business Arrangement Disclosure Statement
	 	 	5.30	(b)
	Coral Lakes Lots
	 	 	8.10	 
	Cummer
	 	 	8.13	 
	Cummer 1044 Land Bank
	 	 	8.14	 
	Developer Agreements
	 	5.17(II)(c)
	DRI
	 	 	5.10	 
	Earn-Out Determination
	 	Schedule 3.6(A)
	Earn-Out Payments
	 	Schedule 3.6(A)
	Earn-Out Periods
	 	Schedule 3.6(A)
	EBITDA
	 	Schedule 3.6(A)
	Entitlement Certificate
	 	 	3.6	(b)
	Falcone
	 	 	8.1	(a)
	Falcone/Ritchie
	 	 	1.1	 
	Final Extension Period
	 	 	12.4	 
	First Extension Period
	 	 	12.4	 
	First Florida Title Company
	 	 	5.30	 
	Florida Condominium Act
	 	 	5.33	 
	Hired Employee
	 	 	8.4	(a)
	HUD
	 	 	5.30	(d)
	Master Cable Agreement
	 	 	2.3	(h)
	Model Homes
	 	 	9.12	 
	Moratorium
	 	 	5.10	(n)
	Multiemployer Plans
	 	 	5.15	(d)
	Negotiation Period
	 	 	12.4	 
	Option Agreements
	 	 	5.10	(b)
	Option Documents
	 	 	4.6	(a)
	Option Governmental Permits
	 	 	5.9	(d)
	Owned Property Governmental Permits
	 	 	5.9	(a)
	Owner
	 	 	4.6	(b)
	Policy
	 	 	7.7	(d)
	Projections
	 	 	5.23	 
	Proposed Substitute Project Notice
	 	 	1.1	 
	Purchase Contracts
	 	 	5.10	(c)

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	Term	 	Section	 
	Remaining Approvals
	 	 	3.6	(d)
	Replaced Project
	 	 	1.1	 
	Request Notice
	 	 	1.1	 
	Required Consents
	 	 	5.1	(c)
	Sellers’ Representative
	 	 	13.14	 
	Sellers’ Review Period
	 	 	3.3	(b)
	SNDA
	 	 	4.6	(b)
	Subcontractor Agreements
	 	5.17(II)(b)
	Supply Agreements
	 	5.17(II)(a)
	Surveys
	 	 	7.7	(b)
	Title Commitments
	 	 	7.7	(b)
	Unaudited Financial Statements
	 	 	5.4	 
	Unresolved Objections
	 	 	3.3	(d)
	Value
	 	 	1.1	 
	Value Disparity
	 	 	1.1	 
	Value Disparity Notice
	 	 	1.1	 
	Vizcaya
	 	 	8.15	 
	WIP
	 	 	5.13	 

ARTICLE II

PURCHASE AND SALE

     2.1 Purchased/Contributed Assets. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date, Sellers shall (i) sell, transfer, assign, convey and deliver
to Buyer, and Buyer shall purchase from Sellers, on a going concern basis, free and clear of all
Encumbrances (except for Permitted Encumbrances), and in each case subject to the provisions of
Section 2.2 below, all Purchased Assets and (ii) cause the Contributed Assets to be
contributed by Falcone/Ritchie LLC to TE/TOUSA, LLC (or to Buyer at the direction of TE/TOUSA,
LLC), in exchange for fifty percent (50%) of the membership interests in TE/TOUSA, LLC, free and
clear of all Encumbrances (except for Permitted Encumbrances).

     2.2 Excluded Assets. Notwithstanding the provisions of Section 2.1, the
Purchased Assets shall not include the assets described on Schedule 2.2 (hereinafter
referred to as the “Excluded Assets”).

     2.3 Assumed Liabilities. As partial consideration for consummation of the transactions
contemplated hereby, at the Closing and subject to the last sentence of this Section 2.3,
Buyer shall assume and agree to perform when due and discharge, the following debts, obligations
and liabilities of Sellers relating to the Business (the “Assumed Liabilities”):

          (a) all customer deposits and accounts payable specified in Schedule 2.3(A), which
Schedule includes a listing of the applicable customer deposits relating to any Real Property that
is the subject of a sale to a customer and is reflected on the Closing Date Balance Sheet;

          (b) those obligations of Sellers reflected in existence as of the Closing Date and included in
the Closing Date Balance Sheet as a dollar amount (including obligations for Other Taxes as
provided in Section 8.3(b)(ii)) other than those amounts to be retired pursuant to
Section 3.1(b);

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          (c) all obligations of Sellers under any roadway improvement agreements, utility agreements or
other agreements with Governmental Bodies or other third parties relating to the zoning, permitting
or development of Lots owned by or under option to Sellers and specified in Schedule
2.3(C);

          (d) all obligations of Sellers under any Option Documents specified in the agreements
identified in Section 5.17(o), including all obligations under any construction agreements
attached as exhibits to and forming a part of any Option Document;

          (e) all obligations for payment of net commissions due to employees of Sellers for the sale of
homes on Lots owned by or under option to Sellers reflected on the Closing Date Balance Sheet of
Sellers and specified in Schedule 2.3(E);

          (f) the liabilities and obligations identified on Schedule 2.3(F), including without
limitation, the obligations under the Seller Agreements being assigned to Buyer, to be performed
after the Closing;

          (g) all obligations of Sellers under purchase orders issued but not recorded on the Closing
Date Balance Sheet as listed on Schedule 2.3(G);

          (h) all obligations of Sellers under the Master Cable Services Agreement dated as of June 7,
2002 by and between TEP and Century Communications of Florida, Inc. (the “Master Cable
Agreement”) solely with respect to communities listed on Schedule 2.3(H), together
with the individual cable services agreements heretofore executed with respect to such communities;
and

          (i) all other obligations which other provisions of this Agreement provide are to be the
responsibility of Buyer after Closing.

     2.4 Excluded Liabilities. Buyer shall not assume or be obligated to pay, perform or
otherwise discharge after the Closing, any liability or obligation of Sellers, direct or indirect,
known or unknown, absolute or contingent unless expressly assumed by Buyer pursuant to this
Agreement (all such liabilities and obligations not being assumed being herein called the
“Excluded Liabilities”). Unless expressly agreed otherwise in this Agreement, including
pursuant to Section 2.3 the following shall be Excluded Liabilities for purposes of this
Agreement:

          (a) any liabilities arising from activities of Sellers prior to Closing, other than with
respect to work in progress acquired by Buyer hereunder, including any liabilities and obligations
related to or arising from (i) the occupancy, operation, use or control of any of the Seller
Property prior to the Closing Date or (ii) the operation of the Business prior to the Closing Date,
in each case incurred or imposed by any Environmental Law, including liabilities and obligations
related to, or arising from, (1) any Release of any Contaminant on, at or from the Seller Property,
including all facilities, improvements, structures and equipment thereon, surface water or
sediments thereon or adjacent thereto and soil or groundwater thereunder, or any conditions
whatsoever on, under or in the vicinity of such real property or (2) the off-site disposal of any
Contaminant that would create liability for Sellers as a generator, arranger, or transporter under
any applicable Environmental Law;

          (b) any obligations related to home closings occurring prior to Closing, except as
specifically provided by the terms of the Warranty Administration Agreement;

          (c) any liabilities in respect of Taxes for which Sellers are liable pursuant to Section
8.3;

16

 

          (d) any payables and other liabilities or obligations of the Companies to TEP or any of its
Affiliates;

          (e) any costs and expenses incurred by Sellers incident to the negotiation and preparation of
this Agreement and the pre-closing performance and compliance by Sellers with the agreements and
conditions contained herein;

          (f) any liabilities under RESPA arising from the operation of the Business prior to the
Closing Date;

          (g) any liabilities in respect of any Proceedings, including, without limitation, any
Proceeding listed on Schedule 5.19;

          (h) accrued liabilities of any kind required to be reflected on the Closing Date Balance Sheet
prepared in accordance with the Agreed Accounting Principles which were not reflected thereon as a
dollar amount;

          (i) any obligations to employees of Sellers (including, without limitation, under the Seller
Plans, any change of control, severance or other payments), arising prior to Closing or as a result
of the transactions contemplated by this Agreement or any obligations under any Seller Plan, other
than those expressly assumed by Buyer under Section 8.4;

          (j) any liability for any fraud, bribery, kickback or similar malfeasance;

          (k) any liability under any contract or any other instrument or agreement assumed by Buyer
pursuant to Section 2.3 that arises after the Closing Date but that arises out of or
relates to any breach or default that occurred prior to the Closing Date;

          (l) any liability to any stockholder, member or partner of any Seller or Affiliate of any
Seller, including any liability of any Seller to distribute to any such parties or otherwise apply
all or any part of the consideration received hereunder;

          (m) any liability to indemnify, reimburse or advance amounts to any manager, employee or agent
of Sellers or any Affiliate;

          (n) any liability based upon Sellers’ or their Affiliates’ acts or omissions occurring after
the Closing;

          (o) any obligation of any Seller to provide a discount off the listing price to any employee
or to any Affiliate of any Seller with respect to any home purchases;

          (p) any liability for deferred payments to Ohio Savings Bank by Sellers for the repurchase of
warrants;

          (q) any liability to Colonial Crossing Associates, LLC by Sellers for any lot deferred
purchase price equal to water and sewer impact fees which would have been payable to the City of
Fort Myers;

          (r) any liability to North Cape Holdings, LLC by Sellers for the sale of surplus fill from
Coral Lakes; and

17

 

          (s) the liabilities identified on Schedule 2.4.

ARTICLE III

PURCHASE PRICE

     3.1 Purchase Price. Simultaneously with the execution of this Agreement, Buyer has
delivered to Sellers immediately available funds in an amount equal to Seven Million Five Hundred
Thousand Dollars ($7,500,000.00), which shall serve as a deposit towards the payment of the
Purchase Price at the Closing (the “Deposit”). The purchase price for the Purchased Assets
(the “Purchase Price”) shall be determined in accordance with Section 3.3 and shall
be equal to:

          (a) Four Hundred Seventeen Million One Hundred Forty-Two Thousand Five Hundred Dollars
($417,142,500.00) reduced by the difference between Seventy-Five Million Dollars ($75,000,000.00)
and the cost basis of the Contributed Assets; plus

          (b) an amount sufficient to retire those certain obligations of Sellers listed on Schedule
3.1(B) (none of which relate to any Excluded Asset) which have a balance as of April 30, 2005
equal to One Hundred Sixty-Seven Million Seven Hundred Twenty-Nine Thousand One Hundred Forty-One
Dollars ($167,729,141), subject to adjustments in the amount of such obligations at Closing by
reason of paydowns or borrowings in accordance with the terms of this Agreement by Sellers prior to
the Closing Date, such amount to be established by the pay-off letters delivered by the holders of
such obligations to the Closing Agent as described in Section 4.4(f) hereof; plus

          (c) the Closing Date Net Worth, as set forth in the certificate prepared by Sellers as
described in Section 3.2 hereof; plus

          (d) up to an aggregate of Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00)
as the Earn-Out Payments pursuant to Section 3.6(a); plus

          (e) up to an aggregate of Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00)
as Entitlement Payments pursuant to Section 3.6(b).

     3.2 Determination of Estimated Purchase Price. Not less than two (2) Business Days
prior to the Closing Date, Sellers shall deliver to Buyer a certificate executed on behalf of
Sellers by the Chief Executive Officer of TEP, dated the date of its delivery, stating that there
has been conducted under the supervision of such officer a review of all relevant information and
data then available and setting forth Sellers’ good faith best estimate of the Estimated Purchase
Price, including an estimate of the Closing Date Net Worth and an estimate of the various accounts
which such officer anticipates, based upon the most recent available financial
statements, will be reflected on the Closing Date Balance Sheet prepared in accordance with
the Agreed Accounting Principles.

     3.3 Determination of Purchase Price.

          (a) As promptly as practicable following the Closing Date (but not later than sixty (60) days
after the Closing Date), Buyer shall:

               (i) prepare, in accordance with the Agreed Accounting Principles, a balance sheet as of the
Closing Date (the “Preliminary Closing Date Balance Sheet”);

18

 

               (ii) determine Closing Date Net Worth and, therefore, the Purchase Price in accordance with
the provisions of this Agreement (such Purchase Price as determined by Buyer being referred to as
the “Preliminary Purchase Price”) (the parties acknowledge that the amount set forth in
Section 3.1(a) and the maximum aggregate amounts in Sections 3.1(d) and
(e) shall not be subject to objection by Buyer); and

               (iii) deliver to Sellers the Preliminary Closing Date Balance Sheet and a certificate setting
forth the Preliminary Purchase Price (collectively, the “Preliminary Accounting Report”).

          (b) Promptly following receipt of the Preliminary Accounting Report, Sellers may review the
same and, within thirty (30) days after the date of such receipt (“Sellers’ Review
Period”), may deliver to Buyer a certificate (signed by the Chief Executive Officer of TEP)
setting forth their objections to the Preliminary Closing Date Balance Sheet and the Preliminary
Purchase Price as set forth in the Preliminary Accounting Report, together with a detailed
explanation of the reasons therefor and calculations which, in its view, are necessary to eliminate
such objections. If Sellers do not so object within Sellers’ Review Period, the Preliminary
Closing Date Balance Sheet and the Preliminary Purchase Price set forth in the Preliminary
Accounting Report shall be final and binding as the Closing Date Balance Sheet (the “Closing
Date Balance Sheet” and the “Purchase Price” respectively), for purposes of this
Agreement but shall not limit the representations, warranties, covenants and agreements of the
parties set forth elsewhere in this Agreement.

          (c) If Sellers so object (and provide the required supporting documentation) within the
Sellers’ Review Period, Buyer and Sellers shall use their reasonable efforts to resolve by written
agreement (the “Agreed Adjustments”) any differences as to the Preliminary Closing Date
Balance Sheet and the calculation of the Closing Date Net Worth included in the determination of
the Preliminary Purchase Price and, if Sellers and Buyer so resolve any such differences, the
Preliminary Closing Date Balance Sheet and the calculation of the Closing Date Net Worth included
in the determination of the Preliminary Purchase Price set forth in the Preliminary Accounting
Report as adjusted by the Agreed Adjustments shall be final and binding as the Closing Date Balance
Sheet and the Purchase Price, respectively, for purposes of this Agreement but shall not limit the
representations, warranties, covenants and agreements of the parties set forth elsewhere in this
Agreement.

          (d) If any objections raised by Sellers are not resolved by Agreed Adjustments within the
thirty (30) day period next following the Sellers’ Review Period, then Buyer and Sellers shall
submit the objections that are then unresolved (the “Unresolved Objections”) to BDO Seidman
(or to such other accounting firm acceptable to both Seller and Buyer) and such firm (the
“Accounting Firm”) shall be directed by Buyer and Sellers to resolve the Unresolved
Objections (based solely on the
presentations by Buyer and by Sellers as to whether any Unresolved Objection had been
determined in a manner consistent with the Agreed Accounting Principles) as promptly as reasonably
practicable and to deliver written notice to each of Buyer and Sellers setting forth its resolution
of the Unresolved Objections. The Preliminary Closing Date Balance Sheet and the Closing Date Net
Worth included in the determination of the Preliminary Purchase Price, after giving effect to any
Agreed Adjustments and to the resolution of Unresolved Objections by the Accounting Firm, shall be
final and binding as the Closing Date Balance Sheet and the Closing Date Net Worth included in the
determination of Purchase Price, respectively, for purposes of this Agreement but shall not limit
the representations, warranties, covenants and agreements of the parties set forth elsewhere in
this Agreement.

          (e) The parties hereto shall make available to Buyer, Sellers and, if applicable, the
Accounting Firm, such books, records and other information (including work papers) as any of the

19

 

foregoing may reasonably request to prepare or review the Preliminary Accounting Report or any
matters submitted to the Accounting Firm.

          (f) If the Accounting Firm determines that the positions of Sellers are correct as to thirty
percent (30%) or more in dollar amount of the Unresolved Objections, then Buyer shall pay the fees
and expenses of the Accounting Firm. In all other cases, Sellers shall pay the fees and expenses
of the Accounting Firm.

     3.4 Adjustment. Promptly (but not later than five (5) Business Days) after the
determination of the Purchase Price pursuant to Section 3.3 that is final and binding as
set forth therein:

          (a) if the Purchase Price exceeds the Estimated Purchase Price (i) Buyer shall pay to Sellers,
by wire transfer of immediately available funds to such bank account of Sellers as Sellers shall
designate in writing to Buyer, an amount equal to the excess, if any, of the Purchase Price over
the Estimated Purchase Price and (ii) the Escrow Agent shall release the Holdback Funds to the
Seller; or

          (b) if the Estimated Purchase Price exceeds the Purchase Price by an amount equal to or
greater than the Holdback Amount (i) Sellers shall pay to Buyer, by wire transfer of immediately
available funds to such bank account of Buyer as Buyer shall designate in writing to Sellers, an
amount equal to the excess of the Estimated Purchase Price minus the Holdback Amount over the
Purchase Price and (ii) the Escrow Agent shall release the Holdback Funds to Buyer; or

          (c) if the Estimated Purchase Price exceeds the Purchase Price by an amount less than the
Holdback Amount, the Escrow Agent shall release from the Holdback Funds (i) to Buyer, an amount
equal to the excess of the Estimated Purchase Price over the Purchase Price and (ii) to Sellers,
the remainder of the Holdback Funds after releasing the amount set forth in clause (i).

     3.5 Allocation of Purchase Price. The parties agree that, for federal income tax
purposes, the Purchase Price shall be allocated among the Purchased Assets and the covenant not to
compete granted pursuant to Section 8.1 in accordance with a schedule (the “Allocation
Schedule”), which shall be prepared by Sellers and reviewed and approved by Buyer in accordance
with the formula set forth on Schedule 3.5 hereto at least five (5) days prior to the
Closing Date. The Allocation Schedule shall be reasonable and shall be prepared in accordance with
Section 1060 of the Code and the Treasury Regulations promulgated thereunder. Sellers agree to
complete and timely file Internal Revenue Service Form 8594 in accordance with the Allocation
Schedule pursuant to this Section 3.5 and to furnish Buyer with a copy of such form
prepared in draft form at least forty-five (45) days prior to the filing due date of such
form. Neither Sellers nor Buyer shall file any return or take a position with any taxing authority
that is inconsistent with the Allocation Schedule. Sellers agree to revise such Form 8594 after
all adjustments, if any, have been made to the Purchase Price in accordance with Section
3.4.

     3.6 Post-Closing Payments.

          (a) (i) As additional consideration for the sale and transfer of the Purchased Assets, Buyer
shall pay to Sellers by wire transfer of immediately available funds the amounts determined
pursuant to Schedule 3.6(A). EBITDA received from the home closings in Substitute Projects
and Additional Projects shall be included in Buyer’s EBITDA for purposes of calculating Sellers’
entitlement to receive the Earn-Out Payments as provided on Schedule 3.6(A).

               (ii) In the event that Technical Olympic, S.A., a corporation organized and existing under the
laws of Greece shall no longer own or control more than fifty percent (50%) of the outstanding
equity interest in Technical Olympic USA, Inc., or in the event that Tousa Homes LP, a

20

 

Delaware
limited partnership, or its Affiliates, shall no longer be the owner of or control at least fifty
percent (50%) of the membership interests in TE/TOUSA, LLC (either event shall be a “Change of
Control”), then Sellers shall be entitled to receive and there shall be paid to Sellers within
thirty (30) days of the date that the Change of Control occurs an amount equal to (1) the sum of
the maximum Earn-Out Payments available for all remaining Earn-Out Periods beginning with the
period in which the Change of Control occurs, multiplied by (2) a fraction (not to exceed 1.00),
the numerator of which shall be the aggregate Actual EBITDA achieved by Buyer for all Earn-Out
Periods preceding the Earn-Out Period in which the Change of Control occurs, and the denominator of
which shall be the aggregate Targeted EBITDA for such preceding Earn-Out Periods. In no event shall
the amount paid by Buyer as Earn-Out Payments exceed Thirty Seven Million Five Hundred Thousand
Dollars ($37,500,000.00).

          (b) (i) Buyer shall pay to Sellers by wire transfer of immediately available funds the amounts
set forth on Schedule 3.6(B) for each Unentitled Lot listed on such schedule which becomes
a Fully Entitled Lot. Each such payment, if any, to be made to Sellers is referred to in this
Agreement as an “Entitlement Payment.” Prior to Closing, Sellers shall cause the engineer
which has been responsible for obtaining the land use change, zoning and other governmental
approvals and permits for each of the Unentitled Lots to deliver to the parties a certificate (the
“Closing Date Certificate”), setting forth each of the permits and approvals which have
been obtained for such respective Lots, and each of the permits and approvals which remain to be
obtained in order for Buyer to be able to obtain building permits for the construction of homes on
such Lots, excluding the approval and recording of plats for such Lots. The delivery by such
engineer, or any replacement engineer which Buyer may retain to replace the engineer which
delivered the certificate as of the Closing Date, of a second certificate (the “Entitlement
Certificate”) certifying that all of the permits and approvals listed on the Closing Date
Certificate or a Lot or group of Lots have been obtained shall constitute conclusive proof that
such Lot(s) is now Fully Entitled. Similarly, the delivery by Sellers to Buyer of certified copies
of all of the permits and approvals listed on the Closing Date Certificate shall also constitute
conclusive proof that such Lot(s) is Fully Entitled. Sellers shall keep Buyer reasonably advised
of any improvements which are required to obtain such permits and approvals and the anticipated
cost of the same. Buyer shall pay to Sellers the Entitlement Payments due with respect to any Lot
for which an Entitlement Certificate has been delivered within ten (10) Business Days of the
invoice from Sellers. Sellers shall submit an invoice to Buyer no more frequently than once every
calendar month for Lots that were not Fully Entitled at Closing, but have become Fully Entitled
since Closing. In no event shall the amount paid by Buyer as Entitlement Payments exceed
Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00).

               (ii) At any time prior to or after Closing, Sellers shall have the right to replace any
Project listed on Schedule 3.6(B) with a Substitute Project. If any Substitute Lot is
Fully Entitled at the time of the approval thereof by Buyer, then the Entitlement Payment for such
Lot shall be payable with the next monthly payment following the earlier of execution of
appropriate transaction documents conveying such Substitute Lot to Buyer or granting to Buyer the
right to acquire such Substitute Lot. The amount which Sellers shall be entitled to receive as
Entitlement Payments for such Substitute Lot(s) shall be calculated by taking the Value of the
Substitute Project (calculated in the same manner set forth in the definition of Substitute
Project), and multiplying such Value by .27998, to establish the aggregate amount of Entitlement
Payments available to Sellers for such Substitute Project. The amount of the additional
Entitlement Payment for each Lot in such Substitute Project shall be calculated by dividing the
total amount of Entitlement Payments for the Substitute Project by the number of Fully Entitled
Lots in the Substitute Project. In no event shall the amount paid by Buyer as Entitlement Payments
exceed Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000.00).

               (iii) Sellers shall have the right to propose to Buyer Additional Projects which are not
presently part of the Purchased Assets but which are offered to Buyer under the Right of First
Offer Agreement. The projects identified on Schedule 7.6 as “Independence 185” and

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“Summerport” shall also be considered Additional Projects. In the event that Sellers and Buyer
agree upon the terms and conditions upon which an Additional Project will be sold to and purchased
by Buyer, then Sellers shall be entitled to receive Entitlement Payments with respect to such Lots
within the Additional Projects which shall be or become Fully Entitled. The amount which Sellers
shall be entitled to receive as Entitlement Payments for such additional Lots shall be calculated
by taking the Value of the Additional Project (calculated in the same manner set forth in the
definition of Substitute Project), and multiplying such Value by .27998, to establish the aggregate
amount of Entitlement Payments available to Sellers for such Additional Project. The amount of the
additional Entitlement Payment for each Lot in such Additional Project shall be calculated by
dividing the total amount of Entitlement Payments for the Additional Project by the number of Fully
Entitled Lots in the Additional Project. Solely for purposes of estimating, determining and
adjusting the Purchase Price, including the payments in respect thereof, pursuant to
Sections 3.2, 3.3 and 3.4, it shall be assumed that all of the
Earn-Out Payments and the maximum amount of the Entitlement Payments have been paid. In no event
shall the amount paid by Buyer as Entitlement Payments exceed Thirty-Seven Million Five Hundred
Thousand Dollars ($37,500,000.00). Buyer shall have the right to direct Sellers to convey or to
cause to be conveyed title to such Additional Project(s) to a separate entity owned by Technical
Olympic USA, Inc. or its Affiliates, if Buyer is unable to purchase such Additional Project. In
the event of such a conveyance, the EBITDA (as defined in Schedule 3.6(A)) realized by such
separate entity from the sale of homes in such Additional Project(s) shall be added to the Actual
EBITDA of Buyer for each respective Earn-Out Period.

          (c) In the event of a Change of Control, one hundred percent (100%) of the amount of the
payments due under Section 3.6(b) which shall then be unpaid to Sellers shall be earned and
shall not be subject to reduction or set-off. Such sums shall be paid to Sellers (i) with respect
to the Contract Property, at the time that Buyer acquires title to the Lot for which the
Entitlement Payment is due, and (ii) with respect to the Optioned Real Property, at the time that
the “Owner” under the respective Option Agreement for the Project which includes such Lot acquires
title to the respective Lot for which the Entitlement Payment is due. With respect to Lots which
are, at any time after Closing, already owned by Buyer or by an Option Agreement “Owner,” the
Entitlement Payment will be immediately due and payable at the time that such Change of Control
occurs.

          (d) Pursuant to the New Option Agreements and the New Purchase Contract (as set forth on
Schedule 5.17(I)), Buyer is responsible for obtaining the governmental approvals and
permits remaining to be obtained with respect to the Projects which are the subject to such
agreements in order for the Lots within such respective projects to become Fully Entitled (the
“Remaining Approvals”) after (i)
in the case of New Option Agreements, the date the owner under each such New Option Agreement
acquires title to the Real Property which is the subject of such new Option Agreement, and (ii) in
the case of New Purchase Contracts, the date on which Buyer acquires title to the Real Property
which is the subject of such New Purchase Contract. Buyer shall keep Sellers reasonably informed
of the progress of its activities in obtaining such Remaining Approvals and shall provide Sellers
with copies of all submissions to, or written communications with, the governmental agencies from
which such Remaining Approvals are to be obtained. Sellers shall be entitled to attend meetings
with such governmental agencies and shall be given reasonable notice of such meetings.

     3.7 Proration of Taxes.

          Real estate and personal property taxes with respect to all of the Real Property and any other
Purchased Asset shall be prorated at Closing. Where available, the 2005 Notice of Proposed
Property Taxes will be used to estimate the amount of property taxes due and when not available,
the 2004 actual tax bill. All such prorations are to be based on the maximum available discount
for early payment. Within thirty (30) days after the issuance of the actual 2005 real property and
tangible personal property tax bills, the taxes shall be reprorated based on the actual taxes. In
the event that the actual taxes

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are higher than the estimate, Sellers shall promptly pay the
difference to Buyer. In the event that the actual taxes are less than estimated, Buyer shall
promptly pay the difference to Sellers. If Sellers fail to make the payment due to Buyer, then
Buyer, in addition to all other rights which it may have under law, may offset such obligation as
set forth in Section 11.1(c)(iii).

ARTICLE IV

CLOSING

     4.1 Closing Date. The Closing shall be consummated at 1:00 p.m., local time, at the
election of Buyer, with two (2) Business Days notice to Sellers, on July 1, 2005, July 18, 2005 or
August 1, 2005, at the offices of Greenberg Traurig, P.A., 777 South Flagler Drive, Suite 300 East,
West Palm Beach, Florida, or at such other place or at such other time as shall be agreed upon by
Buyer and Sellers. The Closing shall be deemed to have become effective as of 11:59 p.m., Eastern
time, on the date on which the Closing occurs (the “Closing Date”), provided that
if the Closing occurs on July 18, 2005, it shall be deemed effective as of July 1, 2005 for
purposes of home closings and all costs and revenues associated with the operation of the Business,
including the interest payable in connection with Schedule 3.1(B) through July 18, 2005.
If the Closing shall occur on a date other than July 18, 2005, it shall be deemed effective as of
such date. Interest incurred for the period July 1, 2005 through July 18, 2005 shall be included
in the Purchase Price to be paid by Buyer.

     4.2 Payment on the Closing Date. Subject to fulfillment or waiver of the conditions
set forth in Article 9 at Closing, Buyer shall pay Sellers by wire transfer of immediately
available funds to the account specified in Schedule 4.2 an amount equal to the Estimated
Purchase Price, less:

               (i) the Deposit, less

               (ii) Seventy-Five Million Dollars ($75,000,000.00), representing the Earn-Out Payments and the
Entitlement Payments; and less

               (iii) Five Million Dollars ($5,000,000.00) (the “Holdback Amount”), which Holdback
Amount shall be delivered by Buyer to the Escrow Agent by wire transfer of immediately available
funds to the account specified by the Escrow Agent along with instructions to hold and thereafter
disburse the Holdback Funds according to Section 3.4; and

               (iv) the amounts due as of the Closing Date to various parties to which Sellers are indebted
as of the Closing Date as set forth on Schedule 3.1(B), which amounts shall be delivered by
Buyer to the Closing Agent, with instructions to pay such amounts to the respective parties in
exchange for the delivery of instruments of satisfaction of the obligations owed to such parties.

     4.3 Buyer’s Additional Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article 9, at Closing, Buyer shall deliver to Sellers all the following:

          (a) a copy of Buyer’s Certificate of Formation certified as of a recent date by the Secretary
of State of the State of Delaware;

          (b) a certificate of good standing of Buyer issued as of a recent date by the Secretary of
State of the State of Delaware;

          (c) a certificate of the secretary or an assistant secretary of Buyer, dated the Closing Date,
in form and substance reasonably satisfactory to Sellers, as to (i) no amendments to the Charter
Document of Buyer since the date of the certified copy delivered pursuant to clause (a) above; (ii)
the operating agreement of Buyer; (iii) the resolutions of the Governing Body of Buyer authorizing
the

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execution, delivery and performance of this Agreement and the Buyer Ancillary Agreements and
the transactions contemplated hereby and thereby; and (iv) incumbency and signatures of the
officers of Buyer executing this Agreement and any Buyer Ancillary Agreement;

          (d) the certificate of Buyer contemplated by Section 10.1 duly executed by an
authorized officer of Buyer;

          (e) an opinion of counsel to Buyer substantially in the form contained in Exhibit A;

          (f) the Warranty Administration Agreement duly executed by Buyer;

          (g) the Employment Agreements duly executed by Buyer;

          (h) the Right of First Offer Agreement duly executed by Buyer;

          (i) the Assignment and Assumption Agreement (including the Copyright Assignment and the
Trademark and Domain Name Assignment, if applicable, substantially in the forms attached hereto as
Exhibits N and O, respectively) duly executed by Buyer;

          (j) the Assignment and Assumption of Contracts duly executed by Buyer,

          (k) the Assignment and Assumption of Leases duly executed by Buyer;

          (l) the Assignment of Option Documents duly executed by Buyer;

          (m) a certificate evidencing Falcone/Ritchie LLC’s fifty percent (50%) membership interest in
TE/TOUSA, LLC; and

          (n) such other documents and instruments as Sellers may reasonably request for facilitating
the consummation or performance of any of the transactions contemplated by this Agreement.

     4.4 Sellers’ Deliveries. Subject to fulfillment or waiver of the conditions set forth
in Article 10 at Closing, Sellers shall deliver to Buyer all the following:

          (a) a copy of the Charter Document of such Seller certified as of a recent date by the
Secretary of State of the State of Florida;

          (b) a certificate of good standing of such Seller issued as of a recent date by the Secretary
of State of the State of Florida;

          (c) a certificate of the manager, managing member or secretary or an assistant secretary of
such Seller, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to
(i) no amendments to the Charter Document of such Seller since the date of the certified copy
delivered pursuant to clause (a) above; (ii) the by-laws or operating agreement of such Seller;
(iii) with respect to such Seller, the resolutions of the Governing Body of such Seller and the
written consent of the shareholders or members, as the case may be, authorizing the execution,
delivery and performance of this Agreement and the Seller Ancillary Agreements and the transactions
contemplated hereby and thereby; (iv) any other resolutions or approvals authorizing the execution,
delivery and performance of this Agreement and the Seller Ancillary Agreements and the transactions
contemplated hereby and thereby to the extent required pursuant to any of the organizational
documents of any Seller; and (v) incumbency and signatures of the officers of each Seller executing
this Agreement and any Seller Ancillary Agreement;

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          (d) an opinion of counsel to Sellers substantially in the form contained in Exhibit B;

          (e) copies of all consents, waivers or approvals obtained by Sellers with respect to the
transfer of the Purchased Assets, or the consummation of the transactions contemplated by this
Agreement;

          (f) one or more payoff letters, substantially in the form attached hereto as Exhibit
C, from any Person to whom Sellers owe indebtedness for borrowed money or as a deferred
purchase price, on terms reasonably satisfactory to Buyer, which commit to release any Encumbrances
upon payment of a specific amount from the proceeds of the sale of the Purchased Assets, it being
understood that Sellers represent that all such Persons and the amounts due to each of them as of
the date hereof are specified in Schedule 3.1(B) subject to adjustment as of the date of
Closing as provided in Section 3.1(b);

          (g) duly executed notices terminating each of the powers of attorney specified in Schedule
5.27 and replacing the authorized signatories with respect to each of the accounts specified in
Schedule 5.27 with individuals designated by Buyer;

          (h) the certificates to be delivered to Buyer pursuant to Section 4.9;

          (i) the Warranty Administration Agreement duly executed by Sellers;

          (j) the Employment Agreements duly executed by Neil Eisner, Jan Ickovic, any Division
President or any Division Manager identified by Buyer;

          (k) the Right of First Offer Agreement duly executed by Sellers;

          (l) a letter of credit (the “Indemnity Letter of Credit”) in the amount of Fifteen
Million Dollars ($15,000,000.00) from Ohio Savings Bank or such other independent financial
institution as Buyer may approve, substantially in the form attached hereto as Exhibit D,
securing a portion of Sellers’ indemnification obligations under Section 11.1;

          (m) the certificates contemplated by Sections 9.1 and 9.2, duly executed by
the Chief Executive Officer of each Seller;

          (n) a signed resignation letter by each of the individuals designated or appointed by Sellers
to serve as an officer or director of any homeowners’ or condominium association or community
development district;

          (o) all existing minute books, stock ledgers and corporate seals of each of the homeowners or
condominium association or community development districts of which any Seller is the declarant and
true and complete copies of the offering prospectus and of all offering materials required to be
provided to retail buyers by the Florida Condominium Act;

          (p) an Assignment and Assumption Agreement (the “Assignment and Assumption
Agreement”), substantially in the form attached hereto as Exhibit E, duly executed by
Sellers, dated the Closing Date, assigning the Purchased Assets (other than Owned Real Property) to
Buyer (including the Copyright Assignment and the Trademark and Domain Name Assignment, if
applicable, substantially in the forms attached hereto as Exhibits N and O,
respectively) and such other documents and other instruments as Buyer may reasonably request or as
may be otherwise necessary to evidence and effect the sale, assignment, transfer, conveyance and
delivery of the Purchased Assets to Buyer;

25

 

          (q) an Assignment and Assumption Agreement with respect to each of the Purchase Contracts (the
“Assignment and Assumption of Contracts”), substantially in the form attached hereto as
Exhibit E-1, duly executed by Sellers, and consented to in writing by the applicable Seller
under each such Purchase Contract, dated the Closing Date, assigning the Purchase Contracts to
Buyer and such other documents and other instruments as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer, conveyance and delivery
of the Purchase Contracts to Buyer. If the consent of any contract seller is not obtained with
respect to any Purchase Contract, such fact shall not result in a delay of Closing, but Sellers
shall replace such Lots with Substitute Lots;

          (r) an Assignment and Assumption Agreement with respect to each of the Leased Real Property
(the “Assignment and Assumption of Leases”), substantially in the form attached hereto as
Exhibit E-2, duly executed by Sellers, and consented to in writing by the landlord with
respect to each Leased Real Property, dated the Closing Date, assigning the Leased Real Property to
Buyer and such other documents and other instruments as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer, conveyance and delivery
of the Leased Real Property to Buyer;

          (s) a bill of sale, substantially in the form attached hereto as Exhibit F, duly
executed by Sellers, dated the Closing Date, assigning the Purchased Assets to Buyer and such other
documents and other instruments as Buyer may reasonably request or as may be otherwise necessary to
evidence and effect the sale, assignment, transfer, conveyance and delivery of the Purchased Assets
to Buyer;

          (t) special warranty deeds conveying to Buyer fee simple marketable title to the Owned Real
Property listed in Schedule 5.10(A), free and clear of all Encumbrances, excepting only
Permitted Encumbrances, including taxes for the year 2005;

          (u) owners’ affidavits in form sufficient to enable the Title Company to delete from the
Policy, the standard exceptions for parties in possession and for construction liens (except with
respect to WIP);

          (v) gap affidavits in form sufficient to enable the Title Company to delete the gap exception,
solely with respect to mechanics’ liens arising from the Excluded Liabilities; and

          (w) a promissory note payable by TEP to Buyer in the form attached hereto as Exhibit Q
in the principal amount of One Million Four Hundred Thirty-Five Thousand Dollars ($1,435,000.00).

     4.5 Governmental Permits. For each Owned Property Governmental Permit listed on
Schedule 5.9(A) hereto (the “Assigned Permits”), Sellers shall execute and deliver
to Buyer at Closing such assignments and other documents as may reasonably be necessary to transfer
or cause to be transferred to Buyer such Owned Property Governmental Permit by the parties having
the authority to so transfer; provided, however, with respect to any Owned Property Governmental
Permit identified on Schedule 5.9(A) hereto as “not transferable,” Sellers shall be
obligated as set forth in Section 7.3 hereof. After Closing, Buyer shall be responsible
for taking such further actions as may be necessary to complete the transfer of such permits, and
Sellers shall execute such further instruments as may be necessary to effectuate such transfer,
providing that the cost of completing such transfer shall be borne solely by Buyer.

26

 

     4.6 Option Lots.

          (a) Prior to Closing, Buyer shall have the right to review all agreements relating to the
Optioned Real Property (the “Option Documents”) including, without limitation, option
agreements, construction agreements, memoranda of option and ancillary documents.

          (b) At Closing, Sellers shall deliver to Buyer, with respect to each parcel of Optioned Real
Property, an Assignment and Assumption of Option Agreement and Related Documents in the form
attached hereto as Exhibit G (the “Assignment of Option Documents”). Each such
Assignment of Option Documents shall be consented to by the holder of fee simple title to such
Optioned Real Property (the “Owner”), as set forth in the “Consent of Owner” section of the
Assignment of Option Documents. For any Optioned Real Property with respect to which a Seller has
a recorded memorandum of option, the Assignment of Option Documents shall be recorded in the public
records of the county in which such Optioned Real Property is located. For any Optioned Real
Property with respect to which Seller does not have a recorded memorandum of option, Sellers shall
cause the applicable Owner to execute a Memorandum of Option and Development Agreement in the form
attached as Exhibit “B” to the Assignment of Option Documents, which shall also be executed by
Buyer at Closing. In the event that there is a mortgage on any of the Optioned Real Property,
Sellers shall cause the applicable Owner to obtain from the holder of such mortgage a recognition,
subordination, non-disturbance and attornment agreement (“SNDA”) in the form attached as
Exhibit “D” to the Assignment of Option Documents. If the “Consent of Owner” and SNDA are not
obtained with respect to any Optioned Real Property, such fact shall not result in a delay of
Closing, but such affected Lot shall be excluded from the Optioned Real Property and Sellers shall
replace such Lots with Substitute Lots. Buyer shall not unreasonably withhold
its consent to any proposed modification of the “Consent of Owner” or SNDA requested by an
Owner or mortgagee.

     4.7 Falcone/Ritchie.(a) Falcone/Ritchie shall have delivered a certificate of its
manager, managing member, secretary or an assistant secretary, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, as to (i) no amendments to its Charter Document since
the date of the certified copy delivered as of the date of execution of this Agreement; (ii) its
operating agreement; (iii) resolutions of its Governing Body and the written consent of its
members, authorizing the execution, delivery and performance of this Agreement and the transactions
contemplated hereby; (iv) any other resolutions or approvals authorizing the execution, delivery
and performance of this Agreement and the transactions contemplated hereby to the extent required
pursuant to any of its organizational documents; and (v) incumbency and signatures of the officers
or manager of Falcone/Ritchie executing this Agreement.

     4.8 Assignment of Developer/Declarant Rights. Sellers shall have delivered to Buyer
an assignment of developer/declarant rights (the “Assignment of Developer/Declarant
Rights”), substantially in the form attached hereto as Exhibit H, with respect to each
Association listed on Schedule 5.33.

     4.9 FIRPTA Certificate. Sellers shall have delivered to Buyer a certification of
non-foreign status, in form and substance reasonably satisfactory to Buyer, in accordance with
Treas. Reg. §1.1445-2(b), and Buyer shall have no actual knowledge that such certification is false
or receive a notice that the certification is false pursuant to Treas. Reg. §1.1445-4.

     4.10 Other Deliverables. Sellers shall execute and deliver (and cause its Affiliates
to execute and deliver) all such other and further materials and documents and instruments of
conveyance, transfer or assignment as Buyer reasonably requests to effect, record or verify the
transfer to and vesting in Buyer, of the right, title and interest of Sellers and their Affiliates
and to the Purchased Assets, free and clear of

27

 

all Encumbrances other than Permitted Encumbrances, in accordance with the terms of this Agreement. To the extent title to the Purchased Assets is
held by an Affiliate of Sellers, Sellers shall cause such Affiliate to execute and deliver all such
other and further materials and documents and instruments of conveyance, transfer or assignment as
Buyer reasonably requests to effect, record or verify the transfer to and vesting in Buyer, of the
right, title and interest of such Affiliate in and to the Purchased Assets, free and clear of all
Encumbrances other than the Permitted Encumbrances, in accordance with the terms of this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

     As an inducement to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, Sellers hereby, jointly and severally, represent and warrant to Buyer and
agrees as follows1:

     5.1 Organization and Authority of Sellers; No Conflict.

          (a) Each Seller is a corporation or limited liability company, as indicated on Schedule
5.1(A) duly organized, validly existing and in good standing under the laws of the State of its
formation, as indicated on Schedule 5.1(A) and is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction listed in Schedule
5.1(A), which jurisdictions are the only ones in which the ownership or leasing of its assets
and properties or the conduct of its business requires such qualification. Sellers, collectively
have full power and authority to own the Purchased Assets and to execute, deliver and perform this
Agreement and all of the Seller Ancillary Agreements. The execution, delivery and performance of
this Agreement and the Seller Ancillary Agreements by each Seller have been duly authorized and
approved by such Seller’s Governing Body and other than as may have been obtained, do not require
any further authorization or consent of any Seller or any of their respective stockholders or other
equity owners, as the case may be. This Agreement is the legal, valid and binding obligation of
each Seller enforceable in accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights and (ii) the application of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law) and upon execution and delivery by each Seller, each Seller Ancillary Agreement
will be a legal, valid and binding obligation of each Seller enforceable in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general applicability affecting the enforcement of creditors’
rights and (ii) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

          (b) True and complete copies of the Charter Documents and all amendments thereto and of the
by-laws or operating agreement, as amended to date, of each Seller have been delivered to Buyer.

          (c) Except as set forth on Schedule 5.1(C), (the “Required Consents”), neither
the execution and delivery of this Agreement or any of the Seller Ancillary Agreements, the
consummation of

 

			
	1	 	For purposes of this Article V, all
references to the “Purchased Assets” shall be deemed to include the
“Contributed Assets.”

28

 

any of the transactions contemplated hereby or thereby nor compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof will:

               (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute
a default, an event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance,
other than Permitted Encumbrances, upon any of the Purchased Assets or any assets or properties of
any Seller, under (A) the Charter Document, by-laws, operating agreement or other organizational
documents of any Seller, (B) any Seller Agreement, (C) any note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right, restriction or obligation to which any Seller is a party
or the Purchased Assets or the assets or properties of any Seller are subject or by which any
Seller is bound, the default under which could reasonably be expected to have a Material Adverse
Effect, (D) any Court Order to which any Seller is a party or any of the Purchased Assets are
subject or by which any Seller is bound, or (E) to the Knowledge of Sellers, any Requirements of
Laws affecting any Seller, the Purchased Assets or the Business of any Seller; or

               (ii) require the approval, consent, authorization or act of, or the making by Sellers of any
declaration, filing or registration with, any Person, except for those declarations, filings or
registrations, the failure of which to obtain could not reasonably be expected to have a Material
Adverse Effect.

          (d) Upon delivery to Buyer on the Closing Date of the assignment documents contemplated by
Section 4.4, Sellers shall thereby transfer to Buyer good and marketable title to the
Purchased Assets, free and clear of all Encumbrances, other than Permitted Encumbrances.

     5.2 Subsidiaries and Investments. Except as set forth on Schedule 5.2, no
Seller directly or indirectly (i) except for TEP’s interests in the Companies, owns, of record or
beneficially, any outstanding voting securities or other equity interests in any corporation,
partnership, limited liability company, joint venture or other entity which is currently involved
in or related to the Business or (ii) except for any homeowners’ association of which Sellers may
be members, control any corporation, partnership, limited liability company, joint venture or other
entity which is involved in or related to the Business.

     5.3 Assets Generally

          (a) Other than the Excluded Assets, the Purchased Assets, together with the services to be
provided to Buyer pursuant to the Supply Agreements and the Subcontractor Agreements, constitute,
and on the Closing Date will constitute, all of the assets and services that are necessary or
appropriate to permit the operation of the Business in substantially the same manner as such
operations have heretofore been conducted.

          (b) Sellers hold, as applicable, good and marketable fee title, a valid contract, a valid and
exclusive option, a license to or a leasehold interest in all of the Purchased Assets, free and
clear of any Encumbrance, other than the Permitted Encumbrances. Upon consummation of the
transactions contemplated by this Agreement, Buyer, will acquire good and marketable title to all
of the Purchased Assets, free and clear of all Encumbrances, other than the Permitted Encumbrances.
Once Buyer has made the payments relating to the Sellers’ debt required by Section 3.1(b)
hereof, no Person other than Sellers shall have any right or interest in the Purchased Assets,
including the right to grant interests in the Purchased Assets to third parties, except for assets
licensed or leased from third parties which are set forth in the schedules hereto and identified as
such.

29

 

          (c) To the extent any asset material to the conduct of the Business is held under any lease,
security agreement, conditional sales contract, lien, or other title retention or security
arrangement, then any such document is listed on Schedule 5.11(B) hereto.

          (d) Except as provided in this Agreement or limited by a Requirement of Law or Seller
Agreement to the Knowledge of Sellers, no restrictions will exist on Buyer’s right to sell, resell,
license or sublicense any of the Purchased Assets or engage in the Business, nor will any such
restrictions be imposed on Buyer as a consequence of the transactions contemplated by this
Agreement.

          (e) All of the tangible personal property included in the Purchased Assets is in good
operating condition and repair, ordinary wear and tear excepted. Sellers have not received notice
of any violation of any Requirement of Law relating to any of the Purchased Assets which violation
would have a Material Adverse Effect.

     5.4 Financial Statements. Schedule 5.4 contains (i) the audited balance sheet
of Sellers on a consolidated basis as of June 30, 2003 and June 30, 2004 and the related statements
of income and cash flows for the years then ended, together with the audit report thereon of
Deloitte & Touche LLP (the “Audited Financial Statements”), (ii) the unaudited balance
sheet of Sellers on a consolidated basis as of the Balance Sheet Date and the related statements of
income and cash flows for the eight (8) months then ended, (iii) the unaudited balance sheet
reflecting the Purchased Assets and Assumed Liabilities as of the Balance Sheet Date and the
related actual and as adjusted statements of income and cash flows for the eight (8) months then
ended related to such Purchased Assets and Assumed Liabilities and (iv) the unaudited balance sheet
of Sellers on a consolidated basis as of March 31, 2005 and the related actual and as adjusted
statements of income and cash flows for the nine (9) months then ended (collectively (ii), (iii)
and (iv), the “Unaudited Financial Statements” and together with the Audited Financial
Statements, the “Financial Statements”). Schedule 5.4 also contains a detailed
composition of Sellers’ restricted cash. Except as set forth therein or in the notes thereto, such
Financial Statements have been prepared in conformity with GAAP consistently applied, and such
balance sheets and related statements of income and cash flow present fairly the financial position
and results of operations and cash flows of Sellers, the Purchased Assets and Assumed Liabilities
on a consolidated basis as of their respective dates and for the respective periods covered
thereby; provided that such unaudited financial statements do not include any notes with respect
thereto. Sellers have also delivered to Buyer copies of all letters from Sellers’ auditors to
Sellers’ officers, directors or shareholders or other equity owners, as the case may be, during the
eighteen (18) months preceding the execution of this Agreement, together with copies of all
responses thereto.

     5.5 Operations Since Balance Sheet Date.

          (a) Except as set forth on Schedule 5.5(A), since the Balance Sheet Date there has
been:

               (i) no Material Adverse Change, and no fact or condition exists or is threatened which might
reasonably be expected to cause a Material Adverse Change in the future; and

               (ii) no damage which could reasonably be expected to have a Material Adverse Effect,
destruction, loss or claim, whether or not covered by insurance, or condemnation or other taking
adversely affecting any of the Purchased Assets, the assets or properties of any Seller or the
Business.

          (b) Except as set forth on Schedule 5.5(B), since the Balance Sheet Date, each Seller
has conducted the Business only in the ordinary course and in conformity with past practice and has
not

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entered into any transaction outside of the ordinary course of business. Without limiting the
generality of the foregoing, since the date of the Audited Financials, except as set forth on such
Schedule, no Seller has:

               (i) sold, leased (as lessor), transferred or otherwise disposed of (including any transfers
from one of the Companies to TEP or any of its Affiliates), or mortgaged or pledged, or imposed or
suffered to be imposed any Encumbrance on, any of the assets reflected on the Balance Sheet or any
assets acquired after the Balance Sheet Date, except (a) for the sale of homes to third-party
homebuyers in the ordinary course of the Business consistent with past practice, (b) for minor
amounts of personal property sold or otherwise disposed of for fair value in the ordinary course of
the Business consistent with past practice, (c) Permitted Encumbrances and (d) borrowings in the
ordinary course of the Business consistent with past practice;

               (ii) cancelled without receiving full consideration therefor any debts owed to or claims held
(including the settlement of any claims or litigation) by any Seller in excess of Five Thousand
Dollars ($5,000.00) individually or Two Hundred Thousand Dollars ($200,000.00) in the aggregate;

               (iii) created, incurred or assumed, or agreed to create, incur or assume, any indebtedness for
borrowed money or as a deferred purchase price or entered into, as lessee, any capitalized lease
obligations (as defined in Statement of Financial Accounting Standards No. 13) other than in the
ordinary course of the Business consistent with past practice;

               (iv) accelerated or delayed collection of notes or accounts receivable in advance of or beyond
their regular due dates or the dates when the same would have been collected in the ordinary course
of the Business consistent with past practice;

               (v) delayed or accelerated payment of any account payable or other liability beyond or in
advance of its due date or the date when such liability would have been paid in the ordinary course
of the Business consistent with past practice;

               (vi) allowed the aggregate levels of raw materials, supplies, work-in-process, finished goods
or other materials included in the inventory of the Business to vary in any respect from the levels
customarily maintained in the Business, except where such variance could not reasonably be expected
to have a Material Adverse Effect;

               (vii) made, or agreed to make, any payment of cash or distribution of assets to any Seller or
any its Affiliates other than salaries paid to employees in accordance with the levels of
compensation set forth on Schedule 5.15(K);

               (viii) instituted any increase in any compensation payable to any employee of any Seller with
respect to the Business or in any profit-sharing, bonus, incentive, contingent commission, deferred
compensation, insurance, pension, retirement, medical, hospital, disability, welfare or other
benefits made available to employees of any Seller with respect to the Business;

               (ix) undergone any Material Adverse Change in any Seller’s relationships with its customers,
suppliers or others having business relations with any Seller, including but not limited to, any
arrangements with suppliers of goods or services relating to billing practices;

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               (x) made any change in the accounting principles and practices used by any Seller from those
applied in the preparation of the Audited Financials and the related statements of income and cash
flow for the period then ended;

               (xi) undertaken or committed to undertake capital expenditures, not including the purchase or
expenses related to the development of Lots, exceeding One Million Dollars ($1,000,000.00) in the
aggregate;

               (xii) made any change to its internal control over financial reporting, or identified or
became aware of any fraud or any significant deficiency or weakness in internal control over
financial reporting, except where such change or weakness could not reasonably be expected to
have a Material Adverse Effect;

               (xiii) entered into or become committed to enter into any other transaction which could
reasonably be expected to have a Material Adverse Effect;

               (xiv) commenced a lawsuit relating to or involving the Purchased Assets or the Business;

               (xv) failed to comply with any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect;

               (xvi) amended its Charter Document or by-laws or operating agreement, as applicable; or

               (xvii) entered into any agreement or commitment, whether written or otherwise, with respect to
any of the foregoing.

     5.6 No Undisclosed Liabilities. Except as set forth on Schedule 5.6, no
Seller with respect to the Business is subject to any liability, whether absolute, contingent,
accrued or otherwise, which is not shown or which is in excess of amounts shown or reserved for in
the Balance Sheet (whether or not required by GAAP to be reflected on the Balance Sheet), other
than liabilities of the same nature as those set forth in the Balance Sheet and reasonably incurred
in the ordinary course of the Business after the Balance Sheet Date consistent with past practice.

     5.7 Taxes.

          (a) Provision for Taxes. The provisions made for Taxes on the Balance Sheet are and
the provisions to be set forth on the Closing Date Balance Sheet will be sufficient for the payment
of all Taxes of Sellers, whether or not disputed, at the date of the Balance Sheet and Closing Date
Balance Sheet, respectively, and for all years and periods prior thereto. Since the Balance Sheet
Date, no Seller has incurred any Taxes other than Taxes incurred in the ordinary course of business
consistent in type and amount with past practices of each Seller.

          (b) Tax Returns Filed. Except as set forth on Schedule 5.7(B), all federal,
state, foreign, county, local and other Tax Returns required to be filed by or on behalf of each
Seller have been timely filed and when filed were complete and accurate in all respects, except
where such incompleteness or inaccuracies could not reasonably be expected to have a Material
Adverse Effect, and the Taxes shown as due thereon were paid or adequately accrued on the books of
each Seller. Except as set forth on Schedule 5.7(B) there is no claim by any jurisdiction
for Taxes in which any Seller does not currently file Tax Returns and, to the Knowledge of any
Seller, there is no expectation or basis for such claim to be

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made. True and complete copies of all Tax Returns filed by each Seller for each of its four most recent fiscal years have been
delivered to Buyer and are listed on Schedule 5.7(B).

          (c) Tax Audits. No Tax Returns of any Seller have been audited by any Taxing
authority except to the extent set forth on Schedule 5.7(C) and no Seller has received from
any Taxing authority, any notice of underpayment of Taxes or other deficiency that has not been
paid, nor any objection to any Tax Return filed by such Seller and, to the Knowledge of any Seller,
no such audit, notice or objection is expected, except as set forth on Schedule 5.7(C).
There are no Encumbrances for
unpaid Taxes and, to the Knowledge of any Seller, there is no reasonable basis for any
Encumbrance to be filed relating to Taxes. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any Tax Return of any Seller, and no
Seller has been requested to waive any statute of limitations in respect of Taxes or has granted
any extension of time with respect to a Tax assessment.

          (d) Other. Except as set forth on Schedule 5.7(D), (i) all Taxes which any
Seller is required by law to withhold or to collect for payment for any purpose (including with
respect to salaries and other compensation) have been duly withheld and collected, and have been
paid to the appropriate Governmental Body or accrued, reserved against and entered on the books of
such Seller; (ii) no Seller has been a member of any Seller Group; (iii) there are no Tax rulings,
requests for rulings, or closing agreements relating to any Seller; (iv) as a result of any closing
agreement (as described in Section 7121 of the Code or any corresponding provision of state or
local Tax law), no Seller will be required to include any item of income in, or exclude any item of
deduction from, any taxable period beginning on or after the Closing Date; (v) no Seller is
currently a party to any Tax allocation agreement or Tax Sharing Arrangement or has an obligation
to make a payment under such an agreement or arrangement; (vi) no power of attorney is currently in
effect for any Seller for any purpose related to Taxes; (vii) no Seller has made any payment, or
has been a party to any agreement obligating it to make a payment, that will not be deductible
because of Section 162, Section 280G or Section 404 of the Code; (viii) no Seller has entered into
any reportable transaction or transaction expected to be reportable pursuant to Treasury
Regulations § 1.6011-4(c); (ix) no Seller has been a party to any agreement that would require any
Seller to indemnify any third party for Taxes; (x) none of the property of any Seller is treated
for income Tax purposes as owned by a Person other than such Seller; and (xi) no interests in any
Seller are subject to risk of forfeiture under Section 83 of the Code.

     5.8 Availability of Assets. Except for Owned Property Governmental Permits specified
in Schedule 5.9(A) that do not constitute Assigned Permits, the Purchased Assets, including
assets and properties owned or leased by Sellers, will at Closing (i) constitute all the assets and
properties, tangible and intangible, of any nature whatsoever, used in or necessary or appropriate
for the operation of the Business as currently conducted (including all books, records, computers
and computer programs and data processing systems); (ii) are in good condition (subject to normal
wear and tear) and serviceable condition; (iii) are suitable for the uses for which intended and;
(iv) include substantially all of the operating assets of Sellers.

     5.9 Governmental Permits.

          (a) Except as set forth on Schedule 5.9(A), for all of the Owned Real Property, each
Seller owns, holds, possesses or has applied or will apply for (as set forth on the Engineers’
Certificates identified on Schedule 5.9(A)) all licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from a Governmental Body which are necessary to
entitle it to own or lease, construct improvements, operate and use its assets and to carry on and
conduct the Business as currently conducted (collectively, the “Owned Property Governmental
Permits”), except where the failure to hold such Owned Property Governmental Permit could not
reasonably be expected to have a Material

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Adverse Effect. Schedule 5.9(A) also separately
sets forth, with respect to each Owned Real Property, a list and brief description of (i) each
Owned Property Governmental Permit, specifying with respect to each such Owned Property
Governmental Permit whether such Owned Property Governmental Permit has been applied for and
obtained or for which an application is pending and (ii) each Owned Property Governmental Permit
owned, held or possessed by any Seller or a party acting on its behalf and used in connection with
the Owned Real Property. Complete and correct copies of all of the Owned Property
Governmental Permits that have been obtained by each Seller and relating to the Owned Real
Property have heretofore been delivered to Buyer by Sellers.

          (b) Except as set forth on Schedule 5.9(B), (i) each Seller has fulfilled and
performed in all respects all of its obligations under each of the Owned Property Governmental
Permits that are required to have been performed as of the date hereof, and, to the Knowledge of
each Seller, no event has occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a breach or default under any such Owned
Property Governmental Permit or which permits or, after notice or lapse of time or both, would
permit revocation or termination of any such Owned Property Governmental Permit, or which might
adversely affect the rights of any Seller under any such Owned Property Governmental Permit, except
where the failure to fulfill or perform its obligations could not reasonably be expected to have a
Material Adverse Effect; (ii) no notice of cancellation, of default or of any dispute concerning
any Owned Property Governmental Permit, or of any event, condition or state of facts described in
the preceding clause, has been received by, or is Known to, any Seller; and (iii) each Owned
Property Governmental Permit is valid, subsisting and in full force and effect and may, upon the
proper application and governmental approval, be assigned and transferred to Buyer in accordance
with this Agreement and will continue in full force and effect thereafter, in each case without the
occurrence of any breach, default or forfeiture of rights thereunder.

          (c) The governmental permits listed on Schedule 5.9(A) collectively constitute all of
the Owned Property Governmental Permits necessary to permit the applicable Seller to lawfully
conduct and operate the Business for its Owned Real Property in the manner in which it currently
conducts and operates such Business and to permit such Seller to own and use the Purchased Assets
for such Owned Real Property in the manner in which it currently owns and uses such Purchased
Assets.

          (d) Except as set forth on Schedule 5.9(D), for all of the Optioned Real Property, the
owner of such Optioned Real Property or a party acting on its behalf owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other authorizations from a
Governmental Body which are necessary to entitle it to deliver Fully Entitled Lots to Sellers under
the agreements existing between such property owner and Sellers (collectively, the “Option
Governmental Permits”), except where the failure to hold such Option Governmental Permit could
not reasonably be expected to have a Material Adverse Effect. Schedule 5.9(D) also
separately sets forth, with respect to each Optioned Real Property, a list and brief description of
(i) each Option Governmental Permit, specifying with respect to each such Option Governmental
Permit whether such Option Governmental Permit has been applied for and obtained or for which an
application is pending and (ii) each Option Governmental Permit owned, held or possessed by each
such property owner or a party acting on its behalf and used in connection with the Optioned Real
Property. Complete and correct copies of all of the Option Governmental Permits that have been
obtained by and relating to the Optioned Real Property have heretofore been delivered to Buyer by
Sellers.

          (e) Except as set forth on Schedule 5.9(E), to the Knowledge of Sellers (i) the owners
of all of the Optioned Real Property have fulfilled and performed in all respects all of their
obligations under each of the Option Governmental Permits that are required to have been performed
as of the date hereof, and, to the Knowledge of each Seller, no event has occurred or condition or
state of facts exists which constitutes or, after notice or lapse of time or both, would constitute
a breach or default

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under any such Option Governmental Permit or which permits or, after notice or
lapse of time or both, would permit revocation or termination of any such Option Governmental
Permit, or which might adversely affect the rights of any Seller under any such Option Governmental
Permit, except where the failure to fulfill or perform its obligations could not reasonably be
expected to have a Material Adverse Effect; (ii) no notice of cancellation, of default or of any
dispute concerning any Option Governmental Permit, or of any event, condition or state of facts
described in the preceding clause, has been received by,
or is Known to, any Seller; and (iii) each Option Governmental Permit is valid, subsisting and
in full force and effect.

          (f) The Option Governmental Permits listed on Schedule 5.9(D) collectively constitute
all of the Option Governmental Permits necessary to permit the applicable Seller to lawfully
conduct and operate the Business for the Optioned Real Property in the manner in which it currently
conducts and operates such Business and to permit such Seller to own and use the Purchased Assets
for such Optioned Real Property in the manner in which it currently owns and uses such Purchased
Assets.

     5.10 Real Property.

          (a) Schedule 5.10(A) contains a description (showing the record title holder, legal
description, tax parcel identification number, location by city and/or county) of all tracts,
parcels and subdivided Lots in which Sellers have an ownership interest (the “Owned Real
Property”).

          (b) Schedule 5.10(B) contains a description (showing the record title holder, legal
description, tax parcel identification number, location by city and/or county) of all tracts,
parcels and subdivided Lots that are subject to option contracts (the “Optioned Real
Property”) to which Sellers are currently a party, together with a listing of all such
agreements (collectively, the “Option Agreements”). To the extent not otherwise reflected
in the Balance Sheet, Schedule 5.10(B) also contains a list of all earnest money deposits
or option payments paid by Sellers in connection with such contracts which have not yet been
credited to the benefit of Sellers. Schedule 5.10(B) also identifies those Lots which have
heretofore been acquired by Sellers under the Option Agreements. The Option Agreements and any
construction agreements related thereto constitute valid and binding obligations of the parties
thereto and are in full force and effect. Correct and complete copies of all Option Agreements
have been delivered by Sellers to Buyer.

          (c) (i) Except as set forth on Schedule 5.10(C), each Seller has fulfilled and
performed in all respects all its obligations, and all obligations binding upon any Owned Real
Property, required to have been fulfilled or performed prior to the Closing Date under each of the
Encumbrances to which any Owned Real Property is subject which could reasonably be expected to have
a Material Adverse Effect, and no Seller nor any Owned Real Property is in breach or default under,
or in violation of or noncompliance with, any such Encumbrances, and, to the Knowledge of Sellers,
no event has occurred and no condition or state of facts exists which, with the passage of time or
the giving of notice or both, would constitute such a breach, default, violation or noncompliance.
The consummation of the transactions contemplated by this Agreement will not result in any breach
or violation of, default under or noncompliance with, or any forfeiture or impairment of any rights
under, any Encumbrance to which any Owned Real Property is subject, or require any consent,
approval or act of, or the making of any filing with, any Person party to or benefited by or
possessing the power or authority to exercise rights or remedies under or with respect to any such
Encumbrance. Complete and correct copies of any title opinions, surveys and appraisals in any
Seller’s possession or any policies of title insurance currently in force and in the possession of
Sellers with respect to each parcel of Owned Real Property have heretofore been delivered by Seller
to Buyer.

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               (ii) Schedule 5.17 also contains a description (showing the record titleholder, legal
description, tax parcel identification number, location by city and/or county) of all tracts,
parcels and subdivided Lots that are subject to purchase contracts (the “Contract Real
Property”) to which Sellers are party (collectively, the “Purchase Contracts”). To the
extent not otherwise reflected in the Balance Sheet, Schedule 5.10(C) also contains a list
of all earnest money deposits paid by Sellers in connection with such contracts which have not yet
been credited to the benefit of Sellers. Correct and complete copies of all Purchase Contracts
have been delivered by Sellers to Buyer.

          (d) Schedule 5.10(D) sets forth a list of each lease or similar agreement (showing the
parties thereto) under which (i) any Seller is lessee of, or holds or operates, any real property
owned by any third Person (the “Leased Real Property”) or (ii) any Seller is lessor of any
of the Owned Real Property. Except as set forth on such Schedule, each Seller has the right to
quiet enjoyment of all the Leased Real Property for the full term of the lease or similar agreement
(and any renewal option related thereto) relating thereto, and the leasehold or other interest of
Sellers in the Leased Real Property is not subject or subordinate to any Encumbrance except for
Permitted Encumbrances. Except as set forth on Schedule 5.10(D), and except for Permitted
Encumbrances, there are no agreements or other documents governing or affecting the occupancy or
tenancy of any of the Leased Real Property by Sellers or of any of the Owned Real Property by any
Person other than Sellers. Complete and correct copies of each such lease or other agreement have
heretofore been delivered by Sellers to Buyer.

          (e) Except as set forth on Schedule 5.10(E), neither the whole nor any part of the
Real Property is subject to any pending suit for condemnation or other taking by any Governmental
Body, and, to the Knowledge of Sellers, no such condemnation or other taking is threatened or
contemplated.

          (f) With respect to any agreements, arrangements, contracts, Leases, licenses, covenants,
conditions, deeds, deeds of trust, rights-of-way, easements, mortgages, restrictions, surveys,
title insurance policies, and other documents granting to Sellers title to or an interest in or
otherwise affecting the Owned Real Property, no breach or event of default by Sellers, to the
Knowledge of Sellers, any other Person exists, and no condition or event has occurred that with the
giving of notice, the lapse of time, or both would constitute a breach or event of default, by
Sellers or, to the Knowledge of Sellers, any other Person.

          (g) The Real Property has all necessary access to and from public highways, streets, and
roads, and/or private roads or rights of way in which Sellers have, or in the case of Optioned Real
Property, upon the acquisition of title to the respective portions of the Optioned Real Property,
will have rights of ingress and egress of record, and no pending Proceeding or other fact or
condition exists that could limit or result in the termination of such access, nor, to Sellers’
Knowledge, is there any threatened Proceeding. To the extent that such access is achieved by means
of an easement (other than an easement established by a recorded plat), such easement is insured
under Sellers’ applicable title insurance policy.

          (h) Except as set forth on Schedule 5.10(H) and on Schedule 5.9(A), electric,
gas (if applicable), sewage, telephone, and water utility facilities and other necessary services
are available with sufficient capacity and without requiring any offsite easements for connection
and service to homes constructed or being constructed on the Real Property, in order to permit the
issuance of building permits and subject only to the construction of the improvements identified in
such Schedules 5.10(H) and 5.9(A) and payment of such installation, connection and
other charges common to the locale in which such Real Property is located (including impact fees)
with respect thereto which in the ordinary course of business are payable to permit the issuance of
certificates of occupancy for the improvements being constructed on the Real Property.

          (i) Except as set forth on Schedule 5.10(I), all of the Real Property has satisfied
all concurrency requirements from all applicable governmental authorities and the appropriate
concurrency

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reservations are in full force and effect and assuming (x) after the Closing, continued
performance of and compliance with all conditions or requirements imposed in connection with the
original issuance thereof, including the construction of any required improvements and (y) after
the Closing, no action by any Governmental Agency to attempt to revoke or disregard such
concurrency reservation, will remain in full force and effect after the Closing with respect to all
of the Real Property so as to permit Buyer and Sellers to continue to obtain the necessary building
permits and certificates of occupancy for their contemplated improvements on the Real Property
without unusual or unreasonable cost or delay.

          (j) All buildings and improvements on the Real Property to the extent installed or constructed
by Sellers are in compliance in all respects with all Requirements of Law, except where such
noncompliance could not reasonably be expected to have a Material Adverse Effect.

          (k) Except as set forth on Schedule 5.10(K), there are no parties in possession of any
portion of the Real Property as lessees or tenants at sufferance.

          (l) Except as incurred in the ordinary course of the Business after the date of the Audited
Financials, there are no unpaid charges, debts, liabilities, claims, or obligations arising from
the construction, occupancy, ownership, use, or operation of the Real Property.

          (m) Except as set forth on Schedule 5.10(M) and other than fee arrangements which
could be discovered by an examination of public records and those impact fees, connection and other
charges which may be contemplated in the conditions of approval and contained in the Governmental
Permits for such projects, no developer-related fees, charges, impact fees or assessments for
public improvements or otherwise made against the Real Property or any Lots included therein are
due and unpaid. Schedule 5.10(M) sets forth all impact fee arrangements with respect to
the Real Property or any Lots.

          (n) There is no moratorium applicable to any of the Real Property on (i) the issuance of
building permits for the construction of residences, or certificates of occupancy therefor, or (ii)
the allocation of sewer or water service or the purchase of sewer or water taps (a
“Moratorium”).

          (o) Each of the Lots included in the Real Property is stable and otherwise suitable for the
construction of a residential structure suitable to the soil conditions thereon.

          (p) Except as listed on Schedule 5.10(P), the Real Property does not contain
“wetlands” as defined under Environmental Law, nor is it subject to regulation by the U.S. Army
Corps of Engineers or the U.S. Environmental Protection Agency or equivalent state or local
Governmental Bodies, or is it located within a “critical”, “preservation”, “conservation”, “habitat
conservation area”, or similar type of area subject to regulation under any Environmental Law, nor,
to the Knowledge of Sellers, does it contain a level of radon above action levels of the U.S.
Environmental Protection Agency.

          (q) The Real Property has not been used as a landfill, unregulated dump site, or waste
disposal area, nor to the Knowledge of Sellers, has it been used as a gravesite.

          (r) Other than proceedings for the zoning of Real Property for residential uses or as
otherwise described on Schedule 5.10(R), no Proceeding is pending or, to the Knowledge of
Sellers, threatened which involves any of the Real Property, or against Sellers with respect to any
of the Real Property; all of the developed Real Property that is not the subject of zoning
proceedings described in Schedule 5.10(R) and the Lots included therein are in compliance
with all Requirements of Laws, including zoning and subdivision laws and ordinances and the Real
Property is zoned to permit single family home, townhome or condominium construction, as
applicable; and none of the development-site

37

 

preparation and construction work performed on the
Real Property has concentrated or diverted surface water or percolating water improperly onto or
from the Real Property or caused or resulted in a Release of any Contaminant in violation of any
Environmental Law or which otherwise requires any Remedial Action or disclosure or notification to
any Governmental Body or third party.

          (s) No Seller has granted to any Person any contract or other right to the use of any portion
of the Real Property or to the furnishing or use of any facility or amenity on or relating to the
Real Property except as shown on the recorded subdivision plats for the Owned Real Property,
homeowners’ or condominium association declarations and except as otherwise set forth in the Permitted
Encumbrances listed on Schedule 5.14.

          (t) All of the improvements and buildings on the Real Property were constructed in a good and
workmanlike manner; substantially comply with all Requirements of Law; do not violate any set back,
zoning law, ordinance, regulation, or statute, or other governmental restriction or any restrictive
covenant affecting any such Real Property; are in good and proper working condition and repair,
normal wear and tear, normal maintenance and normal warranty and customer services matters
excepted; and are useful for their intended purposes.

          (u) Any improvements and buildings included within the Real Property are located within the
boundary lines of the Real Property and do not encroach upon the land of any adjacent owner; no
improvements of any third Person encroach upon the Real Property.

          (v) The recorded easements, rights-of-way, covenants, and other title exceptions and survey
matters do not adversely affect the current or proposed beneficial use of the Real Property. The
Real Property is being developed and used in compliance with all covenants, easements, and
restrictions affecting the Real Property, and all obligations of Sellers on the Real Property with
regard to such covenants, easements, and restrictions have been and are being performed in a proper
and timely manner.

          (w) Except as set forth on Schedule 5.10(W), to the Knowledge of Sellers, there are no
historical or archeological materials or artifacts of any kind or any Native American ruins of any
kind located on the Real Property.

          (x) Except as set forth on Schedule 5.10(X), no part of the Real Property is “critical
habitat” as defined in the Endangered Species Act, or in regulations promulgated thereunder, nor
are any “endangered species” or “threatened species” located on the Real Property, as defined
therein, or under any similar state or local Environmental Law.

          (y) All Lots within Owned Real Property and Optioned Real Property which have been graded as
of the date of this Agreement and as of the Closing Date shall have building pads that are graded
to an elevation where the finished floor elevation of the residence to be built thereon are above
the 100-year flood plain (as shown on Federal Emergency Management Agency Maps) using sufficient
materials to grade the entire Lot for proper drainage and, with respect to Lots within Optioned
Real Property to be graded after Closing, will be outside the 100-year flood plain if the Lots are
graded pursuant to grading plans approved by the applicable city and/or county in which such Lots
are located.

          (z) Sellers do not have any liability for any Taxes, or any interest or penalty in respect
thereof, of any nature that may be assessed against Buyer or Sellers or that are or may become a
lien against the Real Property, other than the lien for current real property taxes, special taxes
and assessments and community development district assessments which are not yet due and payable.

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          (aa) Except as disclosed in Schedule 2.3(C), there are no commitments to any
Governmental Body, school board, church or other religious body or to any other organization, group
or individual relating to the Real Property that would impose any obligations upon the Buyer to
make any contributions of money or land or to install or maintain any improvements.

          (bb) There is no Mold which renders any homes built by Sellers unfit for its intended
residential use (even if there is no violation of any Requirements of Laws) unless caused by the
actions of the homeowner after the closing of the sale of such home to the homeowner and there is
no design defect, construction defect, use or defective construction materials which has caused, or
is reasonably likely to cause, the growth of Mold which will render any homes built by Sellers or to be built by
Sellers on the Real Property, assuming the development of such property in the ordinary course of
the Business, unfit for residential use.

          (cc) Neither the “Cummer” property nor any other Real Property which constitutes a Development
of Regional Impact (“DRI”) or is subject to a pending application for DRI approval is
subject to aggregation with any adjacent lands, assuming continued separate ownership of the
“Cummer” property. In the event that such adjacent lands are hereinafter owned by a single entity,
or multiple entities under common control, the properties will likely be subject to aggregation.

          (dd) The Owned Real Property, the Optioned Real Property, the Coral Lakes Lots, the
Contributed Assets, the Contract Real Property and the properties currently subject to the Right of
First Offer Agreement as identified on Schedule 7.6 together constitute all of the Real
Property owned, under option or under contract by Sellers and each of Arthur J. Falcone and Edward
W. Falcone for the development of residences pursuant to the Business.

     5.11 Personal Property.

          (a) Schedule 5.11(A) contains a list of all machinery, equipment, vehicles, furniture
and other tangible personal property owned by Sellers having an original cost of Fifty Thousand
Dollars ($50,000.00) or more and used in or relating to the Business.

          (b) Schedule 5.11(B) contains a list of each lease or other agreement or right,
whether written or oral (showing in each case the parties thereto), under which any Seller with
respect to the Business is lessee of, or holds or operates, any machinery, equipment, vehicle or
other tangible personal property owned by a third Person.

     5.12 Intellectual Property; Software.

          (a) Schedule 5.12(A) contains a list and description (showing in each case the
registered or other owner, expiration date and registration or application number, if any) of all
Intellectual Property (including all assumed or fictitious names under which any Seller is
conducting the Business or has within the previous five (5) years conducted the Business and
telephone numbers used in connection with the Business) owned by, licensed to or used by any
Sellers. The Intellectual Property listed on Schedule 5.12(A) is sufficient and includes
all Intellectual Property necessary for Sellers to conduct the Business as presently conducted.

          (b) Schedule 5.12(B) contains a list and description (showing in each case any owner,
licensor or licensee) of all Software owned by, licensed to or used by any Seller and used in the
Business, including mass market Software licensed to any Seller that is available in consumer
retail stores or otherwise commercially available and subject to “shrink-wrap” or “click-through”
license agreements.

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          (c) Schedule 5.12(C) contains a list and description of all written and unwritten
agreements, contracts, licenses, sublicenses, assignments and indemnities which relate to (i) any
Intellectual Property listed in Schedule 5.12(A) or (ii) any Software listed in
Schedule 5.12(B).

          (d) Except as disclosed in Schedule 5.12(D), Sellers own the entire right, title and
interest in and to their Intellectual Property and Software free and clear of any Encumbrance,
except with respect to licensed Software for which Sellers have the perpetual, royalty-free right
to use the same. Except as set forth on Schedule 5.12(D), Sellers are listed in the
records of the appropriate United States, state or non-U.S. registry as the sole current owner of
record for each application or registration identified
in Schedule 5.12(A) or as being owned by such Person. Except as disclosed on
Schedule 5.12(D), no royalties, fees, honorariums or other consideration is required to be
paid to any Person with respect to any of the Intellectual Property or Software.

          (e) Except as disclosed on Schedule 5.12(E), (i) all registrations for Intellectual
Property identified on Schedule 5.12(A) as being owned by any Seller are valid and in
force, and all applications to register any unregistered Intellectual Property so identified are
pending and in good standing, all without challenge of any kind; (ii) the Intellectual Property
owned by Sellers has not been cancelled or abandoned and is valid and enforceable; (iii) Sellers
have the sole and exclusive right to bring actions for infringement, misappropriation, dilution,
violation or unauthorized use of the Intellectual Property and Software owned by Sellers, and to
the Knowledge of Sellers, there is no basis for any such action; (iv) Sellers have taken all
actions reasonably necessary to protect, maintain and where necessary register, the Copyrights,
Trademarks, Software, Patent Rights or Trade Secrets; and (v) no Seller is in breach of any
agreement affecting the Intellectual Property, nor has any Seller taken any action which would
impair or otherwise adversely affect its rights in the Intellectual Property.

          (f) Except as set forth on Schedule 5.12(F), (i) no infringement, misappropriation,
violation or dilution of any Intellectual Property, or any rights of publicity or privacy relating
to the use of names, likenesses, voices, signatures or biographical information, of any other
Person has occurred or results in any way from the operations of the Business or any other use of
any Seller’s Intellectual Property by any Seller; (ii) no claim of any infringement,
misappropriation, violation or dilution of any Intellectual Property or any such rights of any
other Person has been made or asserted in respect of the operations of the Business or any use of
any Seller’s Intellectual Property by any Seller or any other action by any Seller; (iii) no claim
of invalidity of any Seller’s Intellectual Property has been made; (iv) no Proceeding is pending
or, to the Knowledge of any Seller, threatened which challenge the validity, ownership or use of
any of their Intellectual Property; and (v) no Seller has received any notice of, or has any
Knowledge of any basis for, a claim against any Seller that the operations, activities, products,
Software, equipment, machinery, processes, any of the Purchased Assets or any other aspect of the
Business infringe, misappropriate, violate or dilute any Intellectual Property or any other rights
of any other Person.

          (g) Except as disclosed on Schedule 5.12(G), (i) the Software identified on
Schedule 5.12(B) is not subject to any transfer, assignment, change of control, site,
equipment, or other operational limitations; (ii) each Seller has maintained and protected the
Quality Assurance Software identified on Schedule 5.12(B), as well as any other Software
owned by Sellers (collectively, the “Owned Software”) (including all source code and system
specifications) with appropriate proprietary notices (including the notice of copyright in
accordance with the requirements of 17 U.S.C. §401), confidentiality and non-disclosure agreements
and such other measures as are necessary to protect the proprietary, trade secret or confidential
information contained therein; (iii) each Seller has copies of all releases or separate versions of
the Owned Software (including all object code and source code) so that the same may be subject to
registration in the United States Copyright Office; (iv) each Seller has complete and exclusive
right, title and interest in and to all versions of the Owned Software, free and clear

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of any Encumbrance, other than Permitted Encumbrances, or any restriction on creating derivative works
based upon any of the Owned Software or any restriction on assignment of the Owned Software to
Buyer; (v) the Owned Software does not, as a whole or in any part, infringe, misappropriate,
violate or dilute any Intellectual Property of any other Person; and (vi) there are no agreements
or arrangements in effect with respect to the marketing, distribution, licensing or promotion of
the Owned Software by any other Person.

          (h) Except as disclosed in Schedule 5.12(H), all employees, agents, consultants or
contractors who have contributed to or participated in the creation or development of any
Intellectual Property or Software on behalf of any Seller or any predecessor in interest thereto
either: (i) created such
materials in the scope of his or her employment; (ii) is a party to a “work-for-hire”
agreement under which Sellers are deemed to be the original owner/author of all rights, title and
interest therein; or (iii) has executed an assignment or an agreement to assign in favor of Sellers
(or such predecessor in interest, as applicable) of all right, title and interest in such material.

     5.13 Work in Progress. To the Knowledge of Sellers, the portions of the work in
progress reflected in the Balance Sheet consisting of partially completed subdivision improvements
and fully or partially completed homes (the “WIP”) has been constructed substantially in
accordance with plans and specifications approved by all applicable Governmental Bodies and in
accordance with all applicable permits, licenses, building codes and other regulations, except
where such noncompliance could not reasonably be expected to have a Material Adverse Effect; the
liabilities reflected in the Balance Sheet accurately reflects the amounts owing under all
contracts for partially completed subdivision improvements and fully or partially completed homes;
and the inventory of raw materials is not defective, substandard, or in violation of the building
codes and other regulations applicable to the homes in which it will be incorporated. No
allegations have been made or “stop work order(s)” issued by any applicable Governmental Body with
respect to any work in progress reflected in the Balance Sheet, except as set forth on Schedule
5.13 or where such allegations or issuances could not reasonably be expected to have a Material
Adverse Effect.

     5.14 Title to Property. Sellers, collectively, have good and marketable title in fee
simple absolute to all Owned Real Property and to all buildings, structures and other improvements
thereon, in each case free and clear of all Encumbrances, except for Permitted Encumbrances (which
include those items specified in Schedule 5.14). Sellers, collectively, have valid,
exclusive options to acquire marketable title in fee simple absolute to all Optioned Real Property,
all Lots and to all buildings, structures, and other improvements thereon, in each case, free and
clear of all Encumbrances, other than Permitted Encumbrances. Sellers, collectively, have valid
contracts to acquire marketable title in fee simple absolute to all Contract Real Property and to
all buildings, structures, and other improvements thereon, in each case, free and clear of all
Encumbrances, other than Permitted Encumbrances. True and complete copies of (i) all deeds,
existing title insurance policies, plans of subdivision, all title encumbrances and exceptions and
surveys of or pertaining to the Real Property and (ii) all instruments, agreements and other
documents evidencing, creating or constituting any Encumbrance, on the Real Property have been
delivered to Buyer. Each Seller represents and warrants to Buyer, that, at the time of Closing,
the Real Property shall be free and clear of all Encumbrances, other than Permitted Encumbrances.
Sellers, collectively, have good and marketable title to all of its other assets and properties,
free and clear of all Encumbrances, except for Permitted Encumbrances. No Person other than
Sellers is in possession or has a right to possession of the Owned Real Property.

     5.15 Employees and Related Agreements; ERISA.

          (a) Schedule 5.15(A) sets forth a list of each retirement, savings, thrift, deferred
compensation, bonus, commission, severance, stock ownership, stock purchase, stock option,
performance, bonus, incentive, vacation pay, sick pay, holiday pay, personal or paid time off,

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hospitalization or other medical, disability, life or other insurance, or other welfare, retiree
welfare or benefit plan, policy, practice, trust, contract, understanding or arrangement of any
kind, whether written or oral, to which any Seller with respect to the Business, is a party or by
which it is bound or pursuant to which it may be required to make any payment or provide any
benefit at any time, other than plans of the type described in Section 5.15(d) (“Seller
Non-ERISA Plans”). The Financial Statements reflect (and the Closing Date Balance Sheet will reflect) all amounts which should be appropriately accrued
under any Seller Non-ERISA Plan.

          (b) Schedule 5.15(B) sets forth a list of each (i) employee collective bargaining
agreement, (ii) affirmative action plan, and (iii) agreement, commitment, understanding, plan,
employee handbook, procedure, human resources policy or procedure manual, policy or arrangement of
any kind, whether written, implied or oral, with or for the benefit of any current or former
officer, director, employee, independent contractor or consultant (including each employment,
compensation, deferred compensation, severance, supplemental pension, life insurance, termination
or consulting agreement or arrangement and any agreements or arrangements associated with a change
in control), to which any Seller with respect to the Business, is a party or by which it is bound
or pursuant to which it may be required to make any payment at any time, other than Seller
Non-ERISA Plans and other than plans of the type described in Section 5.15(d) (“Seller
Compensation Commitments”).

          (c) Sellers have delivered to Buyer correct and complete copies of all written Seller
Non-ERISA Plans and Seller Compensation Commitments and of all related insurance and annuity
policies and contracts and other documents with respect to each Seller Non-ERISA Plan and Seller
Compensation Commitment. Schedules 5.15(A) and 5.15(B) contain a description of all
oral Seller Non-ERISA Plans and Seller Compensation Commitments.

          (d) Schedule 5.15(D) sets forth a list of each “employee pension benefit plan” (as
such term is defined in Section 3(2) of ERISA) and each “employee welfare benefit plan” (as such
term is defined in Section 3(1) of ERISA) covering any employee or former employee of any Seller
with respect to the Business (collectively, “Seller ERISA Plans” and, together with the
“Seller Non-ERISA Plans” and the “Seller Compensation Commitments”, the “Seller
Plans”). Except as set forth on Schedule 5.15(D) (i) no Seller with respect to the
Business has ever maintained any employee pension benefit plan, (ii) no Seller has ever maintained
any employee pension benefit plan subject to Section 302 of ERISA or Section 412 of the Code or
Title IV of ERISA, and (iii) no Seller with respect to the Business has ever been required to
contribute to any “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) (any
such multi-employer plan listed on such Schedule being referred to herein as the “Multiemployer
Plans”).

          (e) Sellers have delivered to Buyer, with respect to each Seller ERISA Plan, correct and
complete copies, where applicable, of (i) all plan documents and amendments, trust agreements and
insurance and annuity contracts and policies, (ii) the most recent IRS determination letter, (iii)
the Annual Reports (Form 5500 Series) and accompanying schedules and actuarial reports, as filed,
for the most recently completed three plan years, (iv) the summary plan description currently in
use and any other summary plan description in use at any time since January 1, 2003, (v) copies of
correspondence from the IRS, the Department of Labor or the Pension Benefit Guaranty Corporation
regarding any plan audit or investigation or any intent to conduct a plan audit, and (vi) in the
case of any Seller ERISA Plan that includes a “cash or deferred arrangement”, defined in Section
401(K)(2) of the Code, copies of the non-discrimination testing results for the three (3) most
recent plan years.

          (f) Each Seller ERISA Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS that such Plan is so qualified under the
Code; and no circumstance exists which might cause such Plan to cease being so qualified.

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          (g) Each Seller ERISA Plan complies, and has been administered to comply, with all
Requirements of Laws, and in compliance with its terms, and there has been no notice issued by any
Governmental Body questioning or challenging such compliance, and there are no actions, suits or
claims (other than routine claims for benefits) pending or, to the Knowledge of Sellers, threatened
involving any such Plan or the assets of any such Plan.

          (h) No Seller has any obligations under any of Seller Non ERISA Plans, Seller Compensation
Commitments or Seller ERISA Plans or otherwise to provide health or death benefits to or in respect
of former employees of any Seller, except as specifically required by the continuation requirements
of Part 6 of Title I of ERISA.

          (i) No Seller has any liability of any kind whatsoever, whether direct, indirect, contingent
or otherwise, on account of (i) any violation of the health care requirements of Part 6 of Title I
of ERISA or Section 4980B of the Code; (ii) under Section 502(i) or Section 502(1) of ERISA or
Section 4975 of the Code; (iii) under Section 302 of ERISA or Section 412 of the Code; or (iv)
under Title IV of ERISA.

          (j) No Seller is an “employee benefit plan” as defined in Section 3(3) of ERISA or a “plan” as
defined in Section 4975 of the Code and none of the Companies constitute the assets of an employee
benefit plan under Department of Labor Regulation Section 2510.3-101.

          (k) Schedule 5.15(K) contains: (i) a list of all employees of Sellers with respect to
the Business as of the Balance Sheet Date; (ii) the then current annual compensation (including
commissions and bonuses) of, and a description of the fringe benefits (other than those generally
available to employees of Sellers) provided to any such employees; (iii) a list of all present or
former employees of Sellers with respect to the Business who have terminated or given notice of
their intention to terminate their relationship with Sellers since the Balance Sheet Date; (iv) a
list of any increase, effective after the Balance Sheet Date, in the salary or rate of commission
of any employees or commission salespersons if such increase exceeds twenty percent (20%) of such
employee’s previous annual salary with respect to salaried employees or twenty-five percent (25%)
of such employee’s previous rate of commission with respect to commission salespersons; and (v) a
list of all substantial changes in job assignments of, or arrangements with, or promotions or
appointments of, any employees or commission salespersons. None of the Companies currently has, or
at any time in the past has had, any employees.

          (l) Except as set forth on Schedule 5.15(L) (i) no Seller is involved in any
transaction or other situation with any employee, officer, director or Affiliate of any Seller
which may be generally characterized as a “conflict of interest”, including direct or indirect
interests in the business of competitors, suppliers or customers of Sellers, and (ii) there are no
situations with respect to the Business which involved or involves (A) the use of any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to
political activity; (B) the making of any direct or indirect unlawful payments to government
officials or others from corporate funds or the establishment or maintenance of any unlawful or
unrecorded funds; (C) the violation of any of the provisions of The Foreign Corrupt Practices Act
of 1977, or any rules or regulations promulgated thereunder; or (D) the receipt of any illegal
discounts or rebates or any other violation of the antitrust laws.

          (m) Except as set forth on Schedule 5.15(M), (i) no Seller is or will be obligated to
pay separation, severance, termination or similar benefits as a result of any transaction
contemplated by this Agreement, nor will any such transaction accelerate the time of payment or
vesting, or increase the amount, of any benefit or other compensation due to any individual; (ii)
the transactions contemplated by this Agreement will not be the direct or indirect cause of any
amount paid or payable by any Seller being classified as an excess parachute payment under Section
280G of the Code; (iii) all required or

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discretionary (in accordance with historical practices) payments, premiums, contributions, reimbursements, or accruals for all periods ending prior to or
as of the Closing Date shall have been made or properly accrued on the Balance Sheet prior to the
Closing Date; and (iv) no Seller has or will have, as
of the Closing Date, any material unfunded actual or contingent liabilities or obligations
with respect to any Seller Plans that are not reflected on the Balance Sheet.

     5.16 Employee Relations. Except as set forth on Schedule 5.16 Sellers have
complied with all applicable Requirements of Laws (including, the Fair Labor Standards Act)
relating to prices, wages, hours (including, overtime hours), working conditions, compensation,
employee benefits, employment taxes, affirmative action, discrimination in employment and
collective bargaining and is not liable for any arrears of wages, any Taxes or any penalties for
failure to comply with any of the foregoing. There is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or, to the Knowledge of any Seller,
threatened against or affecting any Seller. No Seller is a party to, and none of them is affected
by or threatened with, any dispute or controversy with a union or with respect to unionization or
collective bargaining involving such employees. No Seller is adversely affected by any dispute or
controversy with a union or with respect to unionization or collective bargaining involving any
supplier or customer of Sellers with respect to the Business. Assuming compliance by Buyer with
the provisions of Section 8.4(a), each Seller is in compliance with the Workers Adjustment
and Retraining Notification Act (“WARN”) and has no liabilities pursuant to WARN. Except
as set forth on Schedule 5.16, there are no administrative charges, grievances, internal
complaints, audits or investigations by a Governmental Body, arbitration claims or demands, court
complaints or consent decrees against any Seller concerning alleged employment discrimination or
other employee relations related matters that are pending, or to the Knowledge of any Seller,
threatened before any Governmental Body. There are no right to sue letters issued to any employee
or former employee by a Governmental Body for which the time to initiate an action in court has not
expired.

     5.17 Contracts.

     (I) Except as set forth on Schedule 5.17(I), no Seller with respect to the Business is
a party to or bound by:

          (a) any contract for the option, purchase or sale of real property not specified in
Schedule 5.10(B) or Schedule 5.10(C), including options, letters of intent, rights
of first offer and other similar contracts;

          (b) any contract for the purchase of services, materials, supplies or equipment which involved
the payment of more than Fifty Thousand Dollars ($50,000.00) (or Two Hundred Fifty Thousand Dollars
($250,000.00) with respect to construction and development contracts) in the most recent fiscal
year, which can reasonably be expected to involve the payment of more than Fifty Thousand Dollars
($50,000.00) (or Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to construction and
development contracts) in the current fiscal year (it being understood that any contract either
listed on Schedule 5.17(II) or not otherwise required to be listed on Schedule
5.17(II) and not exceeding the thresholds set forth herein need not be listed);

          (c) any contract for the sale of goods (other than homes) or services which involved the
payment of more than Twenty-Five Thousand Dollars ($25,000.00) in the most recent fiscal year,
which can reasonably be expected to involve the payment of more than Twenty-Five Thousand Dollars
($25,000.00) in the current fiscal year or which extends beyond six (6) months from the date
hereof;

          (d) any contract for the purchase, licensing or development of software;

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          (e) any consignment, distributor, dealer, manufacturers representative, sales agency,
advertising representative or advertising or public relations contract;

          (f) any guarantee of the obligations of customers, suppliers, officers, directors, employees,
Affiliates or others;

          (g) any collective bargaining agreements or any contracts and agreements with any labor union
or other employee representative of a group of employees relating to wages, hours and other
conditions of employment;

          (h) any joint venture agreements;

          (i) any contract which limits or restricts where Sellers may conduct the Business or the type
or line of business in which Sellers may engage;

          (j) any powers of attorney;

          (k) contracts not made in the ordinary course of business;

          (l) any other contracts (A) which are material to the Business or (B) the termination or
cancellation of which would have a Material Adverse Effect, or (C) which are believed by any Seller
to be of unique value even though not material to the Business;

          (m) any contract with any title or mortgage companies;

          (n) any contract (excluding routine checking account overdraft agreements involving petty cash
amounts) under which any Seller has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness of more than Fifty Thousand Dollars ($50,000.00) which remains
unpaid as of the date hereof, or under which any Seller has imposed (or may impose) a security
interest or Encumbrance on any of its assets, whether tangible or intangible, to secure
indebtedness, other than as set forth on Schedule 3.1(B);

          (o) any Option Agreements for the purchase of Lots or undeveloped land owned by or under
options to Sellers other than those listed on Schedule 5.10(B);

          (p) except for those contracts otherwise listed on Schedule 5.17(I) or (II),
any contract which by its terms has a duration of more than twelve (12) months from the date hereof
(including any contract which may be extended by the unilateral action of the counterparty);

          (q) except for those contracts otherwise listed on Schedule 5.17(I) or (II),
any contract which by its terms provides for the provision of goods or services (whether by a
Seller or the counterparty) in more than one community; or

          (r) any amendment, supplement and modification (whether oral or written) in respect of any of
the foregoing.

     (II) Set forth on Schedule 5.17(II) are:

          (a) with respect to each of Sellers’ Divisions, all agreements or other arrangements (oral or
written) with those fifteen (15) suppliers and vendors (other than those subcontractors or
developers listed in clauses (b) and (c) below and other than those professional services such as
attorneys

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or accountants) to whom Sellers have paid the greatest amounts for goods and services during
the twelve (12) months ended as of the Balance Sheet Date (such agreements are referred to
collectively as the “Supply Agreements”);

          (b) with respect to each of Sellers’ Divisions, all agreements or other arrangements (oral or
written) with those fifteen (15) subcontractors to whom Sellers have paid the greatest amounts for
goods and services during the twelve (12) months ended as of the Balance Sheet Date (such
agreements are referred to collectively as the “Subcontractor Agreements”);

          (c) with respect to each of Sellers’ Divisions, all agreements or other arrangements (oral or
written) with those fifteen (15) developers to whom Sellers have paid the greatest amounts for
goods and services during the twelve (12) months ended as of the Balance Sheet Date (such
agreements are referred to collectively as the “Developer Agreements”); or

          (d) any amendment, supplement and modification (whether oral or written) in respect of any of
the foregoing.

     5.18 Status of Contracts. Except as set forth on Schedule 5.18, each Seller
Agreement constitutes a valid and binding obligation of the parties thereto and is in full force
and effect and is disclosed on the appropriate Schedule except for those Seller Agreements which,
pursuant to a provision of this Agreement, need not be disclosed. Except as set forth on
Schedule 5.1(C) and except for those Seller Agreements which by their terms will expire
prior to the Closing Date or are otherwise to be terminated prior to the Closing Date in accordance
with the provisions hereof, each of the Seller Agreements will continue in full force and effect
after the Closing, in each case without breaching the terms thereof or resulting in the forfeiture
or impairment of any rights thereunder, and without the consent, approval or act of, or the making
of any filing with, any other party. Each Seller has fulfilled and performed its obligations under
each of the Seller Agreements, and no Seller is in, or alleged to be in, breach or default under,
nor is there alleged to be any basis for termination of, any of the Seller Agreements, except where
such breach could not reasonably be expected to have a Material Adverse Effect. No other party to
any of the Seller Agreements has breached or defaulted thereunder, and no event has occurred and no
condition or state of facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by any Seller or by any such other party. There are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any amounts paid or
payable to Sellers under current or completed contracts with any Person having the contractual or
statutory right to demand or require such renegotiation and no such Person has made written demand
for such renegotiation, where in any such case the change in any such amount would have a Material
Adverse Effect.

     5.19 No Violation or Litigation. Except as set forth on Schedule 5.19:

               (i) none of the Purchased Assets, Sellers or any of their assets or properties are subject to
any Court Order;

               (ii) Sellers have complied with all Requirements of Laws and Court Orders which are applicable
to the Purchased Assets and the assets or properties of Sellers or the Business;

               (iii) there are no lawsuits, claims, suits, Proceedings or investigations pending or, to the
Knowledge of Sellers, threatened, at law or in equity, against or affecting the Purchased Assets,
Sellers or their assets or properties or the Business nor, to the Knowledge of any Seller, is
there any basis for any of the same, and there are no lawsuits, suits or Proceedings pending in
which Sellers is the

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plaintiff or claimant or which relates to the Purchased Assets, Sellers or
their assets or properties or the Business;

               (iv) there is no action, suit or Proceeding pending or, to the Knowledge of Sellers,
threatened, at law or in equity, which questions the legality or propriety of the transactions
contemplated by this Agreement and Sellers have no Knowledge of any basis for such actions, suits
or Proceeding;

               (v) to the Knowledge of Sellers, no legislative or regulatory proposal has been adopted which
could adversely affect the Purchased Assets, Sellers or the Business;

               (vi) there is no Court Order to which any Seller or its Affiliates, the Business or any of the
Purchased Assets is subject; and no officer, manager, agent or employee of any Seller or its
Affiliates is subject to any Court Order that prohibits such officer, manager, agent or employee
from engaging in or continuing any conduct, activity or practice relating to the Business;

               (vii) no Governmental Body has at any time taken any action to prevent Sellers from
manufacturing, offering or selling any of its homes or services in the present manner or style
thereof; and

               (viii) no homebuyer has challenged the provision in Sellers’ home sales contracts which
permits Sellers to increase the purchase price to cover cost increases.

     5.20 Environmental Matters. Except as set forth in Part I of Schedule 5.20 or
expressly specified in any reports specified in Part II of Schedule 5.20;

          (a) the operations of Sellers comply with all applicable Environmental Laws, except where such
noncompliance could not reasonably be expected to have a Material Adverse Effect;

          (b) except as set forth on Schedule 5.9(A), each Seller has obtained all
environmental, health and safety governmental permits necessary for its operations on the Owned
Real Property, and all such Owned Property Governmental Permits are in good standing and each
Seller is in compliance with all terms and conditions of such permits and except as set forth on
Schedule 5.9(D), each Seller has obtained all environmental, health and safety governmental
permits necessary for its operations on the Optioned Real Property, and all such Option
Governmental Permits are in good standing and each Seller is in compliance with all terms and
conditions of such permits;

          (c) all improvements to the Owned Real Property or Optioned Real Property or any of the other
Purchased Assets, including grading, have been made pursuant to all required Governmental Permits,
including Governmental Permits required under Environmental Laws;

          (d) there are no (and, to the Knowledge of Sellers, there is no basis for any) (i)
noncompliance orders, warning letters, claims, or notices of violation issued to or, to the
Knowledge of Sellers, threatened against; (ii) suits, actions, or administrative, regulatory, or
judicial investigations or proceedings commenced or, to the Knowledge of Sellers, threatened
against; and/or (iii) judgments, penalties, decrees or fines imposed or, to the Knowledge of
Seller, threatened against Sellers, or the Purchased Assets by any Governmental Body or third party
relating to or arising out of any Environmental Law, Remedial Action, or any claim of Losses and Expenses in connection with a
Release or threatened Release of a Contaminant into the environment, or the violation or alleged
violation of any Environmental Law;

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          (e) no Seller has entered into any settlement agreement, consent order, or consent decrees
with a Governmental Body or third party relating to or arising out of any Environmental Law,
Remedial Action, or any claim of Losses and Expenses in connection with a Release or threatened
Release of a Contaminant into the environment, or the violation or alleged violation of any
Environmental Law;

          (f) no Seller has:

               (i) reported a Release of a hazardous substance pursuant to Section 103(a) of CERCLA, or any
state equivalent;

               (ii) filed a notice pursuant to Section 103(c) of CERCLA;

               (iii) filed a notice pursuant to Section 3010 of RCRA indicating the generation of any
hazardous waste, as that term is defined under 40 CFR Part 261 or any state equivalent;

               (iv) filed any notice under any Environmental Law reporting a violation of any Environmental
Law which could reasonably be expected to have a Material Adverse Effect; or

               (v) filed a notice with the Florida Department of Environmental Protection (or any delegated
or contracted local agency) voluntarily or otherwise pursuant to Chapters 376 or 403, Florida
Statutes, and the regulations promulgated thereunder and codified in the Florida Administrative
Code or any other Governmental Body pursuant to any other Environmental Law, reporting or otherwise
disclosing the Release of any Contaminant into any structure, onto any surface, or into the
environment, including but not limited to soil, groundwater, surface water, and/or sediments;

          (g) there is not now, nor to the Knowledge of Sellers has there ever been, on or in any Seller
Property:

               (i) any treatment, recycling, storage or disposal of any hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent, that requires or required a Governmental
Permit pursuant to Section 3005 of RCRA; or

               (ii) any cattle dipping vat, aboveground storage tank, underground storage tank, surface
impoundment, waste pile, landfill, or uncontrolled dumping or staging of solid waste;

          (h) there is not now on or in any Purchased Asset any polychlorinated biphenyls (PCB) used in
pigments, hydraulic oils, electrical transformers or other equipment;

          (i) no Seller has received any notice or claim to the effect that it is or may be liable to
any Person as a result of the Release or threatened Release of a Contaminant;

          (j) there has not occurred, nor is there presently occurring, any Release or, to the Knowledge
of any Seller, any threatened Release of any Contaminant on, into, under, from, or towards the Real
Property;

          (k) no Environmental Encumbrance has attached to any Seller Property;

          (l) any asbestos-containing material which is on or part of any Seller Property which contains
any asbestos material is in good repair and in a friable condition according to the current

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standards and practices governing such material, and its presence or condition does not violate any
currently applicable Environmental Law;

          (m) Sellers have adopted and follow procedures for the investigation of matters covered by
Environmental Laws in the evaluation of real property for purchase or development, including the
retention of properly licensed environmental engineers to perform environmental assessments in
compliance with ASTM Guidelines;

          (n) All of Sellers’ communities are in compliance with the federal and Florida National
Pollutant Discharge Elimination System stormwater regulations; and all of Sellers (i) have filed
Notices of Intent with the Florida Department of Environmental Protection for each community; (ii)
have stormwater pollution prevention plans in place, utilizing best management practices; and (iii)
have up to date inspection procedures in place;

          (o) Part II of Schedule 5.20 identifies all Phase I and Phase II Environmental Site
Assessment Reports, Environmental Compliance Audits, Site Assessment Reports, Remedial Action
Plans, Risk Assessments, Tank Closure Reports, Groundwater Monitoring Reports, Asbestos Surveys,
Geotechnical Surveys, Wetland Surveys, and other reports and correspondence (i) prepared by or at
the direction of Sellers (or, to the Knowledge of Sellers, any of Sellers’ predecessors) for
internal review or review by third parties or (ii) submitted to any Governmental Body that relate
in any way to the Real Property or to any other real property ever owned, leased or used at any
time by Sellers; and

          (p) Part III of Schedule 5.20 identifies:

               (i) all ongoing or pending environmental assessment work (“Environmental Stage I
Work”), the name of the environmental engineer conducting (or that will be conducting) the
Environmental Stage I Work, and the proposal issued by the environmental engineer to conduct the
Environmental Stage I Work;

               (ii) all ongoing or pending environmental remediation work (“Environmental Stage II
Work”) the name of the environmental engineer conducting (or that will be conducting) the
Environmental Stage II Work, and the proposal issued by the environmental engineer to conduct the
Environmental Stage II Work; and

               (iii) all ongoing or pending environmental monitoring work or environmental operations and
maintenance activities (“Environmental Stage III Work”), the name of the environmental
engineer conducting (or that will be conducting) the Environmental Stage III Work, and the proposal
issued by the environmental engineer to conduct the Environmental Stage III Work.

     5.21 Insurance. Schedule 5.21 sets forth a list and brief description
(including nature of coverage, limits, deductibles, self-insured retentions, premiums and the loss
experience for the most recent five (5) years with respect to each type of coverage) of all
policies of insurance maintained, owned or held by any Seller on the date hereof with respect to
the ongoing, products/completed operations, assets or properties of Sellers or the Business. Each
Seller, has delivered to Buyer accurate and complete copies of all such policies of insurance and
correspondence relating to a denial of coverage thereunder, as well as accurate and complete copies
of all pending applications by any Seller for policies of insurance and any statement by the
auditor of Sellers’ Financial Statements or any consultant or risk management advisor with regard
to the adequacy of any Seller’s coverage or of the reserves for claims, except where Sellers
have not received such policies of insurance, in which case, copies of the binders have been
delivered to Buyer. There is no claim by any Seller pending under any of such policies or bonds as
to which coverage has been questioned, denied or disputed by the underwriters of such policies and
bonds. All premiums

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due and payable under all such policies and bonds have been paid and each
Seller is otherwise in compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage), except where such noncompliance could
not reasonably be expected to have a Material Adverse Effect. To each Seller’s Knowledge, there is
no threatened termination of any of such policies, other than as set forth on Schedule 5.21
hereto. Each Seller shall keep or cause such insurance or comparable insurance to be kept in full
force and effect through the Closing Date. Each Seller has complied in all respects with each of
such insurance policies and has not failed to give any notice or present any claim thereunder in a
due and timely manner, except where such noncompliance, failure to give notice or present any claim
could not reasonably be expected to have a Material Adverse Effect.

     5.22 Major Suppliers.

          (a) All Supply Agreements are in full force and effect and are valid and enforceable in
accordance with their respective terms against the applicable Seller and against the other party
thereto. No Seller is in default of any term or provision of any Supply Agreement (nor has any
Seller caused an event which with notice or lapse of time, or both, would constitute such a
default), nor, to any Seller’s Knowledge, is any other party thereto in default (nor is there any
event which with notice or lapse of time, or both, would constitute a default) under any Supply
Agreement, which could reasonably be expected to have a Material Adverse Effect.

          (b) All Subcontractor Agreements are in full force and effect and are valid and enforceable in
accordance with their respective terms against the applicable Seller and against the other party
thereto. No Seller is in default of any term or provision of any Subcontractor Agreement (nor has
any Seller caused an event which with notice of lapse of time, or both, would constitute such a
default), nor, to any Seller’s Knowledge, is any other party thereto in default (nor is there any
event which with notice or lapse of time, or both, would constitute a default) under any
Subcontractor Agreement, which could reasonably be expected to have a Material Adverse Effect.

     5.23 Projections. Sellers have made available to Buyer certain projections for each
of the years ending June 30, 2005, 2006, 2007, 2008 and 2009 with respect to the Business (the
“Projections”) as set forth on Schedule 5.23, including, without limitation, the
budgets of capital, payroll and other material expenditures (including expenditures related to the
cable systems in the communities listed on Schedule 2.3(H) of the Business, prepared in the
ordinary course of the Business and the total capital expenditures through the Balance Sheet Date
for each capital expenditure project for which funds are proposed to be expended, the projected
delivery dates of homes, the pre-tax contributions, the dates by which the Lots will be Fully
Entitled and the costs to complete construction obligations under “land banking” arrangements.
Sellers represent and warrant that such Projections were prepared in good faith and are based on
assumptions that are reasonable.

5.24 Warranties; Construction Defects.

          (a) Schedule 5.24(A) sets forth (i) specimen copies of the forms of written warranties
issued by Sellers to third-party homebuyers and (ii) a summary of the warranty expense incurred by
Sellers during each of its last fiscal year and from July 1, 2004 through the Balance Sheet Date.
The warranty reserve set forth in the Financial Statements are adequate as of the Closing Date.
Except with respect to electrical wiring within walls for which the warranty is for two (2)
years, condensers for air conditioners (parts only) for which the warranty is for five (5) years,
load bearing structure of homes for which the warranty is for ten (10) years and roof trusses for
which the warranty is for ten (10) years, all other warranties are limited to one (1) year. All
homes and all products manufactured, merchandised, serviced, distributed, sold or delivered by
Sellers at any time on or prior to the Closing Date have been in conformity in all respects with
all basic plans and specifications and

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applicable contractual commitments agreed to between the
applicable Seller and the purchaser of such home and express or implied warranties, except where
such non-conformity could not reasonably be expected to have a Material Adverse Effect. There is
no design defect or construction defect or common element defect with respect to any of such homes
that could reasonably be expected to have a Material Adverse Effect. There are no Proceedings
pending or threatened against any Seller or pending by any Seller, relating to the Business and
containing allegations that any homes are defective or were improperly designed or constructed or
improperly labeled or otherwise improperly described for use and there is no known basis for any of
the foregoing. To the Knowledge of Sellers, no liability exists for any return claim, warranty
claim or other obligation to provide service on, or to repair or replace, any products sold or
delivered by Sellers at any time on or prior to the Closing Date beyond the amounts reserved for
warranty expense reflected in the Balance Sheet or to be reflected in the Closing Date Balance
Sheet that could reasonably be expected to have a Material Adverse Effect. No homes products
heretofore sold by Sellers are now the subject of any guarantee or warranty other than Sellers’
standard forms of written warranties, except as specifically described in Schedule 5.24(A).

          (b) Schedule 5.24(B) sets forth: (i) a true and complete list of all home repurchases
by any Seller which closed escrow since January 1, 2003; and (ii) the number of customer service
requests by tract with respect to any home sold by any Seller which were open and not resolved as
of the Balance Sheet Date. Except as set forth on Schedule 5.24(B) there are no warranty
claims which have been asserted against any Seller exceeding One Thousand Dollars ($1,000.00) per
individual house pending or settled or which resulted in home purchases since January 1, 2004.

     5.25 No Finder. No Seller and any Person acting on their behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for or on account of
the transactions contemplated by this Agreement other than to JMP Securities, whose fees and
expenses, to the extent payable, shall be paid solely by Sellers pursuant to a separate agreement
between TEP and JMP Securities.

     5.26 Reserved.

     5.27 Bank Accounts; Power of Attorney; Minute Books.

          (a) Schedule 5.27 sets forth a complete and correct list of all bank accounts and safe
deposit boxes of Sellers and Persons authorized to sign or otherwise act with respect thereto as of
the date hereof, specifying with respect to each, the name and address of the institution, the name
under which the account is maintained, the account number, and the name and title or capacity of
each person authorized to have access thereto and a complete and correct list of all Persons
holding a general or special power of attorney granted by Sellers and a complete and correct copy
thereof. Also set forth on Schedule 5.27 is the balance in the “sweep” account as of the
Business Day prior to the date of this Agreement and the balances in all other accounts of Sellers
as of the second Business Day prior to the date of this Agreement. The balances in each bank
account shall be updated as of the first and second Business Days immediately preceding the Closing
Date, respectively.

          (b) True and complete copies of the minute books, if any, of Sellers have been delivered to
Buyer. Such minute books contain true and complete records of all meetings and other corporate or
limited liability company action taken by the Governing Bodies and stockholders or members of
Sellers.

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     5.28 Related Party and Other Transactions.

          (a) Except as set forth on Schedule 5.28(A) since July 1, 2003, no Seller (i) has
directly or indirectly, purchased, leased or otherwise acquired any property or obtained any
services, or sold, leased or otherwise disposed of any property or furnished any services (except
with respect to remuneration for services rendered as a director, officer or employee of any Seller
as disclosed to the Buyer), in the ordinary course of business or otherwise (or is a party to any
agreement to do any of the foregoing), from or to (1) any other Affiliate of Sellers, or (2) any
Person who is an officer or director of any Seller; or (ii) owns or has owned, of record or as a
beneficial owner, an equity interest or any other financial or profit interest in any Person that
has (1) had business dealings or a material financial interest in any transaction with any Seller
or pertaining to the Purchased Assets, other than business dealings or transactions disclosed on
Schedule 5.28(A), each of which has been conducted in the ordinary course of business with
Sellers at substantially prevailing market prices and on substantially prevailing market terms or
(2) engaged in competition with any Seller with respect to any line of the products or services of
Sellers (a “Competing Business”) in any market presently served by any Seller, except for
ownership of less than one percent (1%) of the outstanding capital stock of any Competing Business
that is publicly traded on any recognized exchange or in the over-the-counter market.

          (b) No Seller nor any officer, employee or agent or other Person acting on their behalf has,
directly or indirectly, since July 1, 2003, given or agreed to give any gift or similar benefit
(other than with respect to bona fide payments for which adequate consideration has been given) to
any customer, supplier, governmental employee or other Person who is or may be in a position to
help or hinder the Business (or assist Sellers in connection with any actual or proposed
transaction) (i) which might subject Sellers to any damage or penalty in any civil, criminal or
governmental litigation or Proceeding, (ii) which, if not continued in the future, could have a
Material Adverse Effect or which would subject Sellers to suit or penalty in any private or
governmental litigation or Proceeding, (iii) for any of the purposes described in Section 162(c) of
the Code, or (iv) for establishment or maintenance of any concealed fund or concealed bank account.

          (c) No Seller nor any Seller’s Affiliate is a party to any contract or agreement with, or has
any claim or right against, any Seller, except as set forth on Schedule 5.28(A) .

     5.29 Patriot Act.

          (a) No Seller is in violation of any laws relating to terrorism or money laundering, including
the Executive Order and/or the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56., the “Patriot
Act”). No Seller is a “Prohibited Person”, which is defined as follows:

               (i) a person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001
and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (the “Executive Order”);

               (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or
entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive
Order;

               (iii) a person or entity with whom Buyer is prohibited from dealing or otherwise engaging in
any transaction by any terrorism or money laundering Law, including the Executive Order and the
Patriot Act;

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               (iv) a person or entity who commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order;

               (v) a person or entity that is named as a “specially designated national and blocked person”
on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control
at its official website, http://www.treas.gov/ofac/tllsdn.pdf or at any replacement website
or other replacement official publication of such list; and

               (vi) a person or entity who is Affiliated with a person or entity listed above.

          (b) No Seller: (i) to the Knowledge of any Seller, conducts any business or engages in any
transaction or dealing with any Prohibited Person, including the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Prohibited Person, (ii) deal
in or otherwise engage in any transaction relating to, any property or interests in property
blocked pursuant to the Executive Order; or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in the Executed Order or the Patriot Act.

     5.30 RESPA.

          (a) No Seller or any Affiliate of any Seller (including, but not limited to the First Florida
Title Services II, LLC (the “First Florida Title Company”) and Liberty Mortgage of South
Florida, LLC) has violated any provision of RESPA, including (without limitation) (i) Section 8(a),
which prohibits kickbacks and referral fees among settlement service providers, (ii) Section 8(b),
which prohibits the charging of unearned fees for settlement services, and (iii) Section 9, which
prohibits requiring the use of a particular title company.

          (b) No Seller or any Affiliate of any Seller has a “controlled business arrangement” or an
“affiliated business arrangement” with any title company, lender, broker or other entity which has
not been properly disclosed to purchasers and prospective purchasers pursuant to a “Controlled
Business Arrangement Disclosure Statement” or an “Affiliated Business Arrangement
Disclosure Statement.” Attached hereto as Schedule 5.30(B) are specimen copies of the
forms of all “Controlled Business Arrangement Disclosure Statements” and “Affiliated
Business Arrangement Disclosure Statements” so disclosed.

          (c) No Seller or any Affiliate of any Seller has charged or accepted “markups” (i.e., closing
or settlement fees or charges to purchasers which exceed the actual cost to seller for such
settlement charges or fees) in connection with their sale of single family residences.

          (d) No Seller or any Affiliate of any Seller is under investigation by, or has received any
request for information from or on behalf of the Department of Housing and Urban Development
(“HUD”) or other law enforcement authority with respect to such entity’s compliance or
possible violation under RESPA.

          (e) Attached hereto as Schedule 5.30(E) are specimen copies of the forms of all
purchase and sale agreements and related addenda and riders utilized by Sellers in connection with
sales of single family residences.

     5.31 Interstate Land Sales Full Disclosure Act. No Seller has violated any provision
of the Interstate Land Sales Full Disclosure Act, except where such violation could not reasonably
be expected to have a Material Adverse Effect. Attached hereto as Schedule 5.31 is an
identification of (a) all

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subdivisions developed by Sellers which are or were exempt from the
registration requirements of the Interstate Land Sales Full Disclosure Act, indicating the
particular grounds for exemption and (b) all statements of record filed pursuant to 15 U.S.C. §1706
and all property reports furnished pursuant to 15 U.S.C. §1707 for subdivisions which are or were
not exempt from the registration requirements of the Interstate Land Sales Full Disclosure Act.
Sellers have furnished true and correct copies or each of such property reports to Buyer. Sellers’
standard retail home sales contract is in compliance with the Interstate Land Sales Full Disclosure
Act.

     5.32 Coastal Construction Control Line. No Seller has sold any property located
either partially or totally seaward of the coastal construction control line as defined in Florida
Statutes §161.57.

     5.33 Homeowners’ Associations; Condominium Associations.

          (a) Each Seller has complied in all respects with the provisions of Florida Statutes §720.401,
requiring the giving of a disclosure statement to each prospective purchaser of real property to
which membership in a residential homeowners association is a prerequisite to ownership, except
where such noncompliance could not reasonably be expected to have a Material Adverse Effect. Each
such disclosure statement contains any description required by law of any recreational or other
facilities which are available for use by the property owners, and a statement of any charges for
the use of those facilities. Each improvement conveyed by Sellers to any homeowners association at
any time on or prior to the Closing Date has been in conformity in all respects with all basic
plans and specifications and applicable contractual commitments agreed to between the applicable
Seller and such association, except where such non-conformity could not reasonably be expected to
have a Material Adverse Effect. There is no design defect or construction defect or common element
defect with respect to any such improvement that could reasonably be expected to have a Material
Adverse Effect. Schedule 5.33 lists all homeowners and condominium associations that
burden the Owned Real Property and Optioned Real Property. All of the associations are controlled
by Sellers unless otherwise indicated on Schedule 5.33 as “homeowner controlled” (the
“Associations”). The Associations have been duly organized, are in good standing, will be
in good standing as of the Closing, and have been operated and managed in accordance with all
Requirements of Law and all organizational documents applicable thereto, including without
limitation, the articles of incorporation, bylaws and covenants applicable to each Association.
Sellers have funded all of their obligations to the Associations, and reasonable reserves have been
established for and are held by each Association, where required by law or the provisions of the
applicable homeowners or condominium association documents, which reserves shall remain the
property of the Associations after the Closing Date.

          (b) Condominiums. The following projects are hereinafter referred to as the
condominium projects (the “Condominium Projects”): Moss Park; Young Pines; South Park;
Williams Island and Laguna Lakes. With respect to the Condominium Projects:

               (i) All improvements constructed as of the Closing Date within the Condominium Projects have
been constructed pursuant to the Requirements of Law, the applicable declaration of condominium,
and the statutory warranties provided in Florida Statutes § 718.203, are hereby made and extended
by each Seller, as developer, to (i) Buyer, (ii) the respective condominium association, and (iii)
all retail buyers within the Condominium Project for all improvements built prior to the Closing.

               (ii) Each Seller has established and funded all capital reserves for each Condominium Project
as required by the Requirements of Law, which reserves shall remain the property of each such
condominium association after the Closing Date.

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               (iii) All retail sales contracts for condominium units within the Condominium Projects comply
with the Requirements of Law, and the retail buyers thereunder have been provided with all
documents and materials required by the Requirements of Law.

               (iv) All earnest money deposits received by Sellers for residential condominium units within
the Condominium Projects are held in escrow with the Title Company, in accordance with the Florida
Condominium Act, Chapter 718, Florida Statutes (the “Florida Condominium Act”). No
reservation or other deposits have been accepted. Each Seller’s rights in and to the escrow
account holding the foregoing deposits shall be assigned to Buyer at Closing.

     5.34 Community Development Districts. Each Seller has complied in all respects with
the provisions of Florida Statutes §190.048 requiring the giving of a disclosure statement to each
prospective purchaser of real property which is part of a Community Development District.

     5.35 Florida Uniform Land Sales Practices Law. No Seller has violated any provision
of the Florida Uniform Land Sales Practices Law, except where such violation could not reasonably
be expected to have a Material Adverse Effect. Attached hereto as Schedule 5.35 is an
identification of (a) all subdivisions developed by Sellers which are or were exempt from the
registration requirements of the Florida Uniform Land Sales Practices Law pursuant to Florida
Statutes §498.027, and (b) all public offering statements and registration statements filed
pursuant to §498.033 or §498.037 for subdivisions which are or were not exempt from the
registration requirements of the Florida Uniform Land Sales Practices Law, together with all
disclosure documents received from any community development district with respect to the public
financing and the maintenance of the improvements to the subdivision are or were undertaken by said
district. Sellers have furnished true and correct copies of each of such public offering
statement, registration statement and community development district disclosure document to Buyer.
Sellers’ standard retail home sales contract is in compliance with the Florida Uniform Land Sales
Practices Law.

     5.36 No Restrictions. Except as set forth on Schedule 5.36, or as imposed by
any Governmental Body, no Seller has entered into any agreement under which any Seller is
restricted from developing land, building residential properties or otherwise operating the
Business in any manner with respect to any class of customers, in any geographic area, during any
period of time or in any segment of the market which would be binding upon Buyer after Closing.
After the Closing, Buyer will not be prevented by any act of Sellers from developing land, building
residential properties or otherwise operating the Business in any manner with
respect to any class of customers, in any geographic area, during any period of time or in any
segment of the market.

     5.37 Compliance With Requirements of Law.

          (a) Except where the same could not reasonably be expected to have a Material Adverse Effect,
all contracts and agreements pursuant to which any Seller has conveyed or agreed to convey title to
any Purchased Assets were, when executed and at the time of such conveyance, if applicable, in
compliance with all Requirements of Law.

          (b) Except where the same could not reasonably be expected to have a Material Adverse Effect,
no event has occurred or circumstance exists that (with or without notice or lapse of time) (A)
may constitute or result in a violation by any Seller of, or a failure on the part of any Seller to
comply with, any Requirements of Law or (B) may give rise to any obligation on the part of any
Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any
nature.

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          (c) To Sellers’ Knowledge, no violation of any Requirements of Laws, including laws,
regulations or ordinances relating to zoning, environmental, city planning or similar matters,
relating to the Business or any Purchased Asset currently exists or has existed at any time during
any Seller’s ownership.

          (d) Except as set forth on Schedule 5.37, Sellers have not received, at any time since
June 30, 2003, any notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or
failure to comply with, any Requirement of Law or (B) any actual, alleged, possible or potential
obligation on the part of any Seller to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature, which could reasonably be expected to have a Material Adverse
Effect.

     5.38 Books and Records. The books of account and other financial records of Sellers,
all of which have been made available to Buyer, are complete and correct and represent actual, bona
fide transactions and have been maintained in accordance with sound business practices, including
the maintenance of an adequate system of internal controls.

     5.39 Accounts Receivable. All Accounts Receivable that are reflected on the Financial
Statements listed on Schedule 5.39, as attached and to be updated, represent or will
represent valid obligations and all are, or will be as of the Closing Date, current and collectible
(other than commission advances to sales agents). Sellers represent and warrant that as of the
date of execution of this Agreement such commission advances do not exceed Four Million Dollars
($4,000,000.00). There is no and will not be any contest, claim, defense or right of set-off under
any contract with any account debtor of an Account Receivable relating to the amount or validity of
such Account Receivable. Schedule 5.39 contains a complete and accurate list of all
Accounts Receivables as of the date of execution of this Agreement, which list sets forth the aging
of each such Account Receivable. Such list shall be updated at Closing.

     5.40 Sellers’ Names. Each Seller’s exact legal name is correctly set forth on Schedule 5.1(A) hereto.
No Seller has previously changed its name from that set forth on Schedule 5.1(A), except as
disclosed on such Schedule.

     5.41 Disclosure. None of the representations or warranties contained herein, none of
the information contained in the Schedules hereto and none of the other certificates, information
or documents furnished to Buyer or any of its representatives by any Seller or its representatives
pursuant to the terms of this Agreement, is false or misleading in any material respect or omits to
state a material fact herein or therein necessary to make the statements herein or therein not
misleading in any material respect. To the Knowledge of Sellers, there is no fact which has or in
the future is likely to cause a Material Adverse Effect which has not been set forth or referred to
in this Agreement or the Schedules hereto.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

     As an inducement to Sellers to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer hereby represents and warrants to Sellers and agrees as follows:

     6.1 Organization of Buyer. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware and has full power
and authority to

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own or lease and to operate and use its assets and properties and to carry on its
business as now conducted.

     6.2 Authority of Buyer; No Conflict.

          (a) Buyer has full power and authority to execute, deliver and perform this Agreement and all
of the Buyer Ancillary Agreements. The execution, delivery and performance of this Agreement and
the Buyer Ancillary Agreements by Buyer have been duly authorized and approved by Buyer’s Governing
Body and do not require any further authorization or consent of Buyer. This Agreement has been
duly authorized, executed and delivered by Buyer and is the legal, valid and binding agreement of
Buyer enforceable in accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors’ rights and (ii) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law), and each of the Buyer Ancillary Agreements has been duly authorized by Buyer and upon
execution and delivery by Buyer will be a legal, valid and binding obligation of Buyer enforceable
in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general applicability affecting the
enforcement of creditors’ rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).

          (b) Neither the execution and delivery of this Agreement or any of the Buyer Ancillary
Agreements or the consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or thereof will:

               (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute
a default, an event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under (A) the Charter Document or operating agreement of
Buyer, (B) any note, instrument, agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which Buyer is a party or any of its assets or
properties is subject or by which Buyer is bound, the default under which could reasonably be
expected to have a Material Adverse Effect, (C) any Court Order to which Buyer is a party or by
which it is bound or (D) to Buyer’s knowledge, any Requirements of Laws affecting Buyer; or

               (ii) require the approval, consent, authorization or act of, or the making by Buyer of any
declaration, filing or registration with, any Person, except for those declarations, filings or
registrations, the failure of which to obtain could not reasonably be expected to have a Material
Adverse Effect.

     6.3 No Finder. Neither Buyer nor any Person acting on its behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for or on account of
the transactions contemplated by this Agreement.

     6.4 Financing. Buyer has sufficient funds available for it to pay the Purchase Price.

     6.5 Ownership. All of the membership interests in Buyer are owned by TE/TOUSA Senior,
LLC. All of the membership interests in TE/TOUSA Senior, LLC are owned by TE/TOUSA Mezzanine, LLC,
which is in turn owned one hundred percent (100%) by TE/TOUSA, LLC.

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ARTICLE VII

ACTIONS PRIOR TO THE CLOSING DATE

     The respective parties hereto covenant and agree to take the following actions between the
date hereof and the Closing Date:

     7.1 Investigation by Buyer. Each Seller shall afford the officers, employees and
authorized representatives of Buyer (including independent public accountants, engineers,
consultants and attorneys) complete access during normal business hours to the offices, properties,
employees, consultants, advisors and business and financial records (including computer files,
retrieval programs and similar documentation and such access and information that may be necessary
in connection with an environmental audit) of any Seller to the extent Buyer shall deem necessary
or desirable and shall furnish to Buyer or its authorized representatives such additional
information concerning the Purchased Assets, the Contributed Assets, the Business and the
operations of any Seller as shall be reasonably requested, including all such information as shall
be necessary to enable Buyer or its representatives to verify the accuracy of the representations
and warranties contained in this Agreement, to verify that the covenants of any Seller contained in
this Agreement have been complied with and to determine whether the conditions set forth in
Article 9 have been satisfied. Buyer agrees that such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operations of any Seller. To the extent
that Buyer shall learn any information during the course of its due diligence investigation of
Sellers which shall conflict with any
representation or warranty made by any Seller hereunder, then Buyer shall be deemed for all
purposes to be aware of such information notwithstanding any representation or warranty to the
contrary made herein by any Seller.

     7.2 Preserve Accuracy of Representations and Warranties; Notification of Certain
Matters.

          (a) Each party hereto shall refrain from taking any action which would render any
representation or warranty contained in Article 5 or 6 inaccurate in any respect as
of the Closing Date. Each party shall promptly notify the other of (i) any event or matter that
could reasonably be expected to cause any of its representations or warranties to be untrue in any
respect or (ii) any action, suit or Proceeding that shall be instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality of any transaction contemplated by
this Agreement.

          (b) During the period prior to the Closing Date, each Seller will notify Buyer of (i) any
Material Adverse Change, (ii) any lawsuit, claim, Proceeding or investigation that is threatened,
brought, asserted or commenced against such Seller which would have been listed in Schedule
5.19 if such lawsuit, claim, Proceeding or investigation had arisen prior to the date hereof,
(iii) any notice or other communication from any third Person alleging that the consent of such
third Person is or may be required in connection with the transactions contemplated by this
Agreement, and (iv) any default under any Seller Agreement or event which, with notice or lapse of
time or both, would become such a default on or prior to the Closing Date and of which Sellers have
Knowledge and could reasonably be expected to result in a Material Adverse Change.

     7.3 Consents of Third Parties.

     Sellers will act diligently and reasonably in attempting to obtain, on or before the Closing
Date, the consent, approval or waiver, in form and substance reasonably satisfactory to Buyer, from
any party to any Seller Agreement required to be obtained to assign and transfer the Purchased
Assets, the Contributed Assets to Buyer or to otherwise satisfy the conditions set forth in
Section 9.5; provided, that Sellers shall

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not make any agreement or understanding
affecting the Purchased Assets, the Contributed Assets, or the Business as a condition for
obtaining any such consents or waivers except with the prior written consent of Buyer. During the
period prior to the Closing Date, Buyer shall act diligently and reasonably to cooperate with
Sellers in attempting to obtain the consents, approvals and waivers contemplated by this
Section 7.3. If the applicable consents are not obtained with respect to any Real
Property, such affected Lot shall be excluded from the Real Property and replaced with a Substitute
Lot.

     7.4 Operations Prior to the Closing Date.

          (a) Sellers shall operate the Business only in the ordinary course consistent with past
practice. Consistent with the foregoing, Sellers shall keep and maintain the Purchased Assets and
the Contributed Assets in good operating condition and repair and shall use their commercially
reasonable efforts consistent with good business practice to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others having business
relations with Sellers in connection with the Business. In connection therewith, Sellers shall
not, with respect to any employee of Sellers (i) transfer such employee to another business unit of
TEP, (ii) offer such employee employment by another business unit of Sellers or its Affiliate after
the Closing Date or (iii) otherwise attempt to persuade any such employee to terminate his or her
relationship with Seller or not to commence employment with Buyer after the Closing.

          (b) Notwithstanding Section 7.4(a) except as expressly contemplated by this Agreement
or except with the express written approval of Buyer, no Seller shall:

               (i) change the operations or finances of the Business in a manner which could reasonably be
expected to have a Material Adverse Effect, without making periodic reports to Buyer;

               (ii) implement operational decisions inconsistent with past practices of Sellers with respect
to the Business of a nature which could reasonably be expected to have a Material Adverse Effect
without first conferring with Buyer;

               (iii) make any change in the Business or the operations of any Seller which could reasonably
be expected to have a Material Adverse Effect;

               (iv) make any capital expenditure or enter into any contract or commitment therefor other than
capital expenditures or commitments for capital expenditures specifically referred to in the
Projections set forth on Schedule 5.23, in excess of One Hundred Thousand Dollars
($100,000.00) in the aggregate; provided, however, that lot purchases and
development and construction expenditures shall not be considered as capital expenditures so long
as such expenditures are consistent with the Projections set forth on Schedule 5.23 and are
otherwise permissible under this Agreement;

               (v) except as contemplated by the Projections set forth on Schedule 5.23, and except
for home sales in the ordinary course of business, enter into any contract, agreement, undertaking
or commitment which would have been required to be set forth on Schedule 5.17 if in effect
on the date hereof or enter into any contract or make any material modification or terminate any
Seller Agreement or Governmental Permit which cannot be assigned to Buyer or a permitted assignee
of Buyer under Section 13.5;

               (vi) except for home sales in the ordinary course of business and except for closings under
home sales contracts in effect on the date hereof and set forth on Schedule 5.17, sell,
lease (as lessor), transfer or otherwise dispose of (including any transfers from the Companies to
TEP or any of

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their Affiliates), or mortgage or pledge, or impose or suffer to be imposed any
Encumbrance on, any of the Purchased Assets, the Contributed Assets or the assets or properties of
Sellers, other than for indebtedness incurred in the ordinary course of the Business as
contemplated by Section 3.1(b) and other than minor amounts of personal property sold or
otherwise disposed of for fair value in the ordinary course of the Business consistent with past
practice and other than Permitted Encumbrances;

               (vii) cancel without receiving full consideration therefore any debts owed to or claims held
by Sellers (including the settlement of any claims or litigation) in excess of Five Thousand
Dollars ($5,000.00) individually or Two Hundred Thousand Dollars ($200,000.00) in the aggregate;

               (viii) create, incur or assume, or agree to create, incur or assume, any indebtedness for
borrowed money or enter into, as lessee, any capitalized lease obligations (as defined in Statement
of Financial Accounting Standards No. 13) other than in the ordinary course of the Business
consistent with past practice;

               (ix) accelerate or delay collection of any notes or accounts receivable in advance of or
beyond their regular due dates or the dates when the same would have been collected in the ordinary
course of the Business consistent with past practice;

               (x) delay or accelerate payment of any account payable or other liability of Sellers beyond or
in advance of its due date or the date when such liability would have been paid in the ordinary
course of the Business consistent with past practice;

               (xi) except to the extent that the same is the result of an event which adversely impacts the
homebuilding industry in general, allow the levels of raw materials, supplies, work-in-process,
finished goods or other materials included in the inventory of Sellers to vary in any respect from
the levels customarily maintained in the Business which could reasonably be expected to have a
Material Adverse Effect;

               (xii) except as set forth on Schedule 7.4(b)(xii) make, or agree to make, any payment
of cash or distribution of assets to Sellers or any of its Affiliates other than salaries paid to
employees in accordance with the levels of compensation set forth on Schedule 5.15(K);

               (xiii) institute any increase in any profit-sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital, disability, welfare or other employee benefit
plan with respect to employees of Sellers with respect to the Business;

               (xiv) make any change in the compensation of Sellers’ employees, other than changes made to
comply with changes in Requirements of Laws or changes for non-officer employees made in accordance
with normal compensation practices and consistent with past compensation practices;

               (xv) prepare or file any Tax Return inconsistent with past practice or, on any such Tax
Return, take any position, make any election, or adopt any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior
periods (including positions, elections or methods which would have the effect of deferring income
to periods for which Buyer is liable pursuant to Section 8.3(a) or accelerating deductions
to periods for which any Seller is liable pursuant to Section 8.3(a));

               (xvi) make any change in the accounting policies applied in the preparation of the financial
statements contained in Schedule 5.4;

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               (xvii) make any change in internal control over financial reporting;

               (xviii) maintain the Purchased Assets and the Contributed Assets in a state of repair and
condition that does not comply with Requirements of Law and is not consistent with the requirements
and normal condition of Sellers’ Business;

               (xix) discontinue its insurance coverage under the policies set forth on Schedule
5.21, unless it obtains a substantially equivalent policy; or

               (xx) enter into any agreement or commitment, whether written or otherwise, with respect to any
of the foregoing.

     7.5 Licenses. Prior to Closing, Sellers shall cooperate with Buyer to obtain all
licenses necessary to conduct the Business, including the contractor’s license. All third party
costs incurred in connection with obtaining such licenses shall be borne by Buyer.

     7.6 Minimum Lot Transfer. The Contract Real Property, the Optioned Real Property and the Owned Real Property are
comprised of Twenty Thousand, Six Hundred Fifty Nine (20,659) approved or proposed individual Lots,
all as set forth on Schedule 7.6. Schedule 7.6 also sets forth a listing of the
Lots which are currently subject to the Right of First Offer Agreement. Sellers have heretofore
paid deposits required with respect to the Option Agreements and the Purchase Contracts as set
forth on Schedules 5.10(B) and 5.10(C). The amount of such deposits shall be
included as assets of Sellers in the determination of the Closing Date Net Worth. Additional
deposits which are required to be made under such Option Agreements and the Purchase Contracts
after the Closing shall be the sole responsibility of Buyer.

     7.7 Title Insurance.

          (a) Buyer shall obtain from Chicago Title Insurance Company or another title insurance company
approved by Buyer in its sole discretion (the “Title Company”) and it shall be a condition
to Buyer’s obligations to consummate the acquisition of the Purchased Assets and TE/TOUSA, LLC’s
agreement to accept the contribution of the Contributed Assets that the Title Company shall issue:

               (i) title insurance in favor of Buyer subject only to the Permitted Encumbrances for all Owned
Real Property transferred to Buyer hereunder, in an amount, pursuant to policy forms and subject to
such endorsements as Buyer may require, all, however, at Buyer’s sole cost and expense; and

               (ii) title insurance in favor of Buyer, subject only to the Permitted Encumbrances, for
Buyer’s option interest in all Optioned Real Property transferred to Buyer hereunder, in an amount
pursuant to policy forms and subject to such endorsements as Buyer may require, all however, at
Buyer’s sole cost and expense.

          (b) Title Commitments and Surveys. Buyer shall arrange for the Title Company to issue
and deliver to Buyer title insurance commitments for each portion of the Real Property, together
with copies of all instruments giving rise to any exceptions or requirements contained therein
(referred to herein collectively as the “Title Commitments”). Buyer has arranged to have
an ALTA land title survey completed for such Real Property which is not currently fully platted
(referred to herein collectively as the “Surveys”). Each Survey shall be completed by a
professional land surveyor reasonably acceptable to Buyer and, in addition to all other
requirements for ALTA land title survey, satisfy Table A items 1, 2, 3, 4, 10, and 11(a) and any
other items specifically requested by Buyer or any permitted successor or assign

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of Buyer. The
Title Commitments and the Surveys shall be issued and certified to Buyer or any permitted successor
or assign of Buyer and shall otherwise be in a form reasonably acceptable to Buyer. With respect
to any Survey ordered by Buyer, a special survey exception will be added for matters shown by such
Survey.

          (c) Title Objections. No later than noon, local time on the eleventh
(11th) day preceding the Closing Date, Buyer shall cause the Title Company to perform
updated title searches with respect to the Seller Property. No later than noon, local time on the
fifth day preceding the Closing Date, Buyer shall notify Sellers as to any exceptions to title
shown by updated title searches or on the Surveys which are not Permitted Encumbrances. With
respect to any exceptions as to which any such objection is made, Sellers and Buyer shall negotiate
in good faith to agree no later than the Closing Date as to the actions to be taken by Buyer and
Sellers to cure or resolve such objections in a manner reasonably acceptable to Buyer;
provided, however, that unless Buyer and Sellers otherwise specifically agree in
writing, neither party shall be obligated to take any specific action with respect to any such
objection and neither party shall be liable for any failure to reach an agreement for curing or
resolving the objections; provided, further, that if the parties do not reach an
agreement, then, at Buyer’s option, Buyer may require Sellers to replace the affected Lot with a
Substitute Lot. A general survey exception shall be included on
the Title Commitment at Closing for any Seller Property that has not been surveyed. With
respect to existing Surveys of the Seller Property heretofore delivered to Buyer that are not
updated, provided the existing Survey is certified to the Title Company, the general survey
exception will be limited to matters arising after the date of such existing Surveys.

          (d) Closing Endorsements. At the Closing (and as a condition to Buyer’s obligation to
proceed with the consummation of the Closing), the Title Company shall have delivered to Buyer
endorsements to the Title Commitment showing that all requirements have been satisfied (excepting
those requirements solely within the control of Buyer), and deleting all exceptions, other than
Permitted Encumbrances, so that the Title Company is unconditionally obligated upon payment of the
applicable premium to issue to Buyer or any permitted successor or assign of Buyer, title insurance
policies insuring title to the Owned Real Property and the Optioned Real Property, in the amount of
the portion of the Purchase Price allocable to such portion of the Owned Real Property and Sellers’
option interest in all Optioned Real Property transferred to Buyer hereunder, subject only to the
Permitted Encumbrances applicable to such portion of the Property (each, a “Policy”).
Buyer and Sellers recognize that Buyer or any permitted successor or assign of Buyer may desire to
have some or all of the Policies to be issued to such party pursuant hereto combined into a single
policy (each, also a “Policy”), listing separately all of such portions of the Owned Real
Property or the property which is the subject of any Seller Agreement and the Permitted
Encumbrances applicable thereto and providing for an amount of insurance equal to the sum of the
portions of the Purchase Price allocable to all such portions of the Owned Real Property or the
property which is the subject of any Seller Agreement to be so combined into the single Policy and,
notwithstanding any other provision of this Section 7.7, if so elected by Buyer or any
permitted successor or assign of Buyer, the Policies shall be so combined.

     7.8 Warranty Administration. Effective upon Closing, Sellers and Buyer shall enter
into the Warranty Administration Agreement with respect to warranty claims for those homes which
Sellers have settled or closed prior to Closing (the “Pre-Closing Warranty Claims”).

     7.9 Acquisition Proposals. No Seller will nor will it authorize or permit any of its
officers, directors or employees or any Affiliate or authorize any investment banker, attorney,
accountant or other representative retained by it or any of its Affiliates to, directly or
indirectly, solicit or encourage, or furnish information with respect to the Purchased Assets, the
Contributed Assets or assets or properties of Sellers or the Business or engage in any discussions
with any Person in connection with, any proposal for the acquisition of any portion of the
Purchased Assets, the Contributed Assets or the Business, other than

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as contemplated by this
Agreement and except for sales of individual residences to third party homebuyers in the ordinary
course of Business consistent with past practice. Sellers will promptly cease or cause to be
terminated any existing activities or discussions with any Person (other than Buyer) with respect
to any of the foregoing and will promptly request the return of any confidential information
provided to any Person in connection with a prospective acquisition of the Purchased Assets, the
Contributed Assets, or any assets or properties of Sellers or the Business.

     7.10 Legal Descriptions. Buyer and Sellers acknowledge that some of the legal
descriptions set forth on Schedule 5.10(A) and Schedule 5.10(B) may need to be
revised, in such a manner as not to materially adversely impact the Real Property to be acquired.
Buyer and Sellers shall continue to cooperate with one another to finalize the legal descriptions
within ten (10) days of the date of this Agreement.

ARTICLE VIII

ADDITIONAL AGREEMENTS

     8.1 Covenant Not to Compete or Solicit Business.

          (a) In furtherance of the sale of the Purchased Assets to Buyer and the contribution of the
Contributed Assets to TE/TOUSA, LLC hereunder by virtue of the transactions contemplated hereby and
to more effectively protect the value and goodwill of the Purchased Assets, the Contributed Assets
and the Business being sold to Buyer, Sellers together with Falcone covenant and agree that, for a
period ending on the third anniversary of the Closing Date, none of them, nor any of their
Affiliates will, anywhere in the counties specified in Schedule 8.1(B):

               (i) directly or indirectly (whether as principal, agent, independent contractor, partner or
otherwise) own, manage, operate, control, participate in, perform services for, sell materials to,
or otherwise carry on, a business similar to or competitive with the Business as conducted by
Sellers as of Closing, including the sale or production of new, single-family, detached homes but
excluding mixed-use projects (being defined as projects which are primarily commercial but also
include residential elements as an ancillary use); provided that such prohibition shall not apply
to any Lot listed on Schedule 8.1(C) hereto (including the thirty-two (32) Lots in Coral
Lakes (the “Coral Lakes Lots”) identified on such Schedule) or the Right of First Offer
Agreement, which Lot is not acquired by Buyer by reason of non-exercise of the option or right of
first offer relating to such Lot for any reason other than the breach of any Seller or its
Affiliates or to the ownership by Falcone/Ritchie LLC of any interest in TE/TOUSA, LLC or its
Subsidiaries; or

               (ii) induce or attempt to persuade any employee, agent or supplier of any Seller with respect
to the Business to terminate such employment, agency or business relationship with Buyer in order
to enter into any such relationship on behalf of any other business organization in competition
with the Business (except for those employees of Sellers who may after Closing be employed by
Century Marketing International, LLC);

provided, however that nothing in clause (i) above shall prohibit Sellers or
Falcone from engaging in the following businesses:

	 	(1)	 	acquiring and converting existing
apartment buildings into condominiums for sale;

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	 	(2)	 	projects to develop multi-family
apartment rental properties, including the conversion of such
rental communities into condominiums for sale;
	 
	 	(3)	 	“land banking”, meaning taking
title to, providing land improvements, and financing raw land on
behalf of homebuilders that prefer to acquire only finished
lots; provided, however, that in the event that
the “builder” under a land banking arrangement fails to acquire
all of the real property subject to such land banking
arrangement, then such real property shall be subject to the
Right of First Offer Agreement;
	 
	 	(4)	 	commercial real estate projects,
including office, commercial, retail and industrial building;
	 
	 	(5)	 	projects to develop residential
condominiums over four (4) stories in height;
	 
	 	(6)	 	development of raw land,
including any combination of acquisition, entitlement and
infrastructure improvement of residential lots for sale to
homebuilders or individual owners; provided that Buyer
shall be given the right of first offer with respect to the
development of any residential lots located within the counties
listed on Schedule 8.1(B);
	 
	 	(7)	 	providing real estate mezzanine
and other debt financing to real estate companies and entities,
including companies and entities that are in the business of the
sale or production of new, single-family, detached homes;
provided that none of Sellers or Falcone may acquire any
equity ownership interest in such companies or entities or their
underlying assets or properties, except: (i) profit
participation rights; and (ii) if, through the exercise of
foreclosure and similar enforcement remedies upon default,
Sellers or Falcone obtain direct ownership rights in the
companies or entities or their assets and properties, with the
right to operate the assets and properties of such entities, so
long as such entities do not build, market or sell single-family
detached homes, townhomes, or residential condominiums less than
five (5) stories in height; provided, however,
that in the event that Sellers acquire any such real property
through foreclosure or deed in lieu of foreclosure, such real
property shall be subject to the Right of First Offer Agreement;
	 
	 	(8)	 	building and marketing a maximum
of two spec homes each year, provided that such homes are
marketed and sold for a sales price no less than Two Million
Dollars ($2,000,000.00) each; and
	 
	 	(9)	 	development, construction and
sale of the projects listed on Schedule 8.1(C) attached
hereto, which shall also be excluded from the Right of First
Offer Agreement.

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          (b) Each of Sellers and Falcone also covenants and agrees that it will not, and will not
permit any of its Affiliates to, divulge any trade secrets or other confidential information of
Sellers or the Business other than to disclose such secrets and information to Buyer or its
Affiliates.

          (c) If any Seller, Falcone or any Affiliate of any Seller or Falcone violates any of its
obligations under this Section 8.1 Buyer may proceed against it in law or in equity for
such damages or other relief as a court may deem appropriate. Each of Sellers and Falcone
acknowledges that a violation of this Section 8.1 may cause Buyer irreparable harm which
may not be adequately compensated for by money damages. Each of Sellers and Falcone therefore
agrees that in the event of any actual or threatened violation of this Section 8.1, Buyer
shall be entitled, in addition to other remedies that it may have, to a temporary restraining order
and to preliminary and final injunctive relief against Sellers, Falcone or such Affiliate of
Sellers to prevent any violations of this Section 8.1. The prevailing party in any action
commenced under this Section 8.1 shall also be entitled to receive reasonable attorneys’
fees and court costs. It is the intent and understanding of each party hereto that if, in any
action before any
court or agency legally empowered to enforce this Section 8.1 any term, restriction,
covenant or promise in this Section 8.1 is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.

     8.2 Release of Bonds. Buyer shall obtain bonds in replacement of (or in support of)
bonds delivered by any Seller to Governmental Bodies or otherwise in connection with the Purchased
Assets, the Contributed Assets and the Business being transferred to Buyer and specified in
Schedule 8.2 and shall use commercially reasonable efforts to cause such Governmental
Bodies to accept such replacement bonds within sixty (60) days of Closing. To the extent that any
of the bonds specified in Schedule 8.2 shall come up for renewal following the Closing but
prior to the replacement thereof by Buyer, Sellers shall cause such renewal to occur; provided that
Buyer shall be responsible for all fees incurred with respect thereto. If Buyer elects to obtain
bonds in support of existing bonds delivered by Sellers to Governmental Bodies rather than
replacement bonds, Buyer shall be responsible for the payment of all fees, costs, premiums or other
expenses incurred by Sellers in any required renewals or extensions of Sellers’ existing bonds. In
the event that any amounts shall be paid under or against any bond delivered by Sellers to
Governmental Bodies resulting from conditions arising or events occurring after the Closing, which
sums are not reimbursed under supporting bonds posted by Buyer, then Buyer shall reimburse Sellers
for any amounts so paid under Sellers’ bonds, together with any costs incurred by Sellers in
connection therewith.

     8.3 Taxes

          (a) Liability for Federal, State, Local and Foreign Income Taxes (collectively “Income
Taxes”).

               (i) Sellers shall be liable for and pay, and pursuant to Article 11 shall jointly and
severally indemnify and hold harmless each Buyer Group Member from and against any and all Losses
and Expenses incurred by such Buyer Group Member in connection with or arising from (A) all Income
Taxes imposed on any Seller, or for which such Seller may otherwise be liable as a result of having
been a member of a Seller Group (including Income Taxes for which Sellers may be liable pursuant to
Treas. Reg. Section 1.1502-6 or similar provisions of state, local or foreign law as a result of
having been a member of a Seller Group and any Income Taxes resulting from Sellers’ ceasing to be a
member of any Seller Group), and (B) all Income Taxes imposed on Sellers and for which Sellers may
otherwise be liable, for any taxable year or period that ends prior to or concurrently with the
Closing Date.

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               (ii) Buyer shall be liable for and pay, and pursuant to Article 11 shall indemnify and
hold harmless each Seller Group Member from and against any and all Losses and Expenses incurred by
such Seller Group Member in connection with or arising from all Income Taxes imposed on any Seller
in connection with the Purchased Assets and the Contributed Assets for any taxable year or period
that begins on or after the Closing Date; provided, however that Buyer shall not be
liable for or pay, and shall not indemnify or hold harmless any Seller Group Member from and
against any Losses or Expenses incurred by such Seller Group Member in connection with or arising
from any Income Taxes for which Sellers are liable under this Agreement (including under
Section 5.7 or Section 8.3(a)(i)).

          (b) Liability For All Taxes Other Than Federal, State, Local and Foreign Income Taxes
(collectively “Other Taxes”).

               (i) Sellers shall be liable for and pay, and pursuant to Article 11 shall jointly and
severally indemnify and hold harmless each Buyer Group Member from and against any and all Losses
and Expenses incurred by such Buyer Group Member in connection with or arising from (A) all Other
Taxes imposed on Sellers, or for which Sellers may otherwise be liable as a result of having been a
member of a Seller Group or resulting from Sellers ceasing to be a member of any Seller Group, and
(B) all Other Taxes imposed on Sellers or for which Sellers may otherwise be liable for any taxable
year or period that ends prior to or concurrently with the Closing Date, except to the extent that
the obligations of Sellers for such Other Taxes are reflected in existence as of the Closing Date
and included in the Closing Date Balance Sheet as a liability which is an Assumed Liability.

               (ii) Buyer shall be liable for and pay, and pursuant to Article 11 shall indemnify and
hold harmless each Seller Group Member from and against any and all Losses and Expenses incurred by
such Seller Group Member in connection with or arising from all Other Taxes relating to the
Purchased Assets and the Contributed Assets to the extent that the obligations for such Other Taxes
relate to a taxable year or period that begins on or after the Closing Date; provided,
however that Buyer shall not be liable for or pay, and shall not indemnify or hold harmless
any Seller Group Member from and against any Losses or Expenses incurred by such Seller Group
Member in connection with or arising from any Other Taxes for which Sellers are liable under this
Agreement (including under Section 5.7 or Section 8.3(b)(i).

          (c) Tax Returns. (i) Sellers shall timely file or cause to be timely filed when due
(taking into account all extensions properly obtained) all Tax Returns that are required to be
filed for taxable years or periods of Sellers ending prior to or concurrently with the Closing Date
(in the case of Tax Returns required to be filed by or with respect to Sellers for such taxable
years or periods on a combined, consolidated or unitary basis with any entity other than solely
Sellers) or due on or before the Closing Date (in the case of other Tax Returns), and in each case
Sellers shall remit or cause to be remitted to the taxing authorities any Taxes due in respect of
such Tax Returns, and (ii) Buyer shall timely file or cause to be timely filed when due (taking
into account all extensions properly obtained) all other Tax Returns that are required to be filed
on or after the Closing Date by or with respect to Sellers and Buyer shall remit or cause to be
remitted to the taxing authorities any Taxes due in respect of such Tax Returns. Sellers or Buyer
shall reimburse the other party the Taxes for which Sellers or Buyer is liable pursuant to
Section 8.3 but which are remitted in respect of any Tax Return to be filed by the other
party pursuant to this Section 8.3(c) upon the written request of the party entitled to
reimbursement setting forth in detail the computation of the amount owed by Sellers or Buyer, as
the case may be, not later than thirty (30) days after the payment of such Taxes. All Tax Returns
which Sellers are required to file or cause to be filed in accordance with this Section
8.3(c) shall be prepared and filed in a manner consistent with past practice and, on such Tax
Returns, no position shall be taken, election made or method adopted that is inconsistent with
positions taken, elections made or methods used in preparing and

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filing similar Tax Returns in
prior periods (including, but not limited to, positions, elections or methods which would have the
effect of deferring income to periods for which Buyer is liable under this Section 8.3 or
accelerating deductions to periods for which Sellers are liable under this Section 8.3).

          (d) Assistance and Cooperation. After the Closing Date, each of Sellers and Buyer
shall (and shall cause their respective Affiliates to):

               (i) timely sign and deliver such certificates or forms as may be necessary or appropriate to
establish an exemption from or reduce the filing of all Tax Returns or other reports with respect
to Other Taxes described in Section 8.3(b) (relating to sales, transfer and similar Taxes);

               (ii) assist the other party in preparing any Tax Returns which such other party is responsible
for preparing and filing in accordance with Section 8.3(c), and in connection therewith
provide the other party necessary powers of attorney;

               (iii) cooperate fully in preparing for and conducting any audits of, or disputes with taxing
authorities regarding, any Tax Returns of Sellers;

               (iv) make available to the other and to any taxing authority as reasonably requested all
information, records, and documents relating to Taxes of Sellers; and

               (v) furnish the other with copies of all correspondence received from any taxing authority in
connection with any Tax audit or information request with respect to any such taxable period.

          (e) Survival of Obligations. Notwithstanding anything to the contrary in this
Agreement, and notwithstanding Section. 13.1 of this Agreement, the obligations of the
parties set forth in this Section 8.3 shall be unconditional and absolute and shall remain
in effect without limitation as to time.

          (f) Meaning of “Income Taxes” and “Other Taxes”. For purposes of this Section
8.3, the term “Income Taxes” shall mean any federal, state, local or foreign net
income, gross income, gross receipts and windfall profit tax. The term “Other Taxes” shall
mean each and every tax (including, but not limited to, sales and use taxes and ad valorem taxes)
enumerated in the definition section of this Agreement under the term “Tax” other than
those identified in the immediately preceding sentence as “Income Taxes”.

     8.4 Employees.

          (a) Offer of Employment. On the Closing Date, Buyer shall offer employment to
substantially all of Sellers’ employees (except for those employees of Sellers who may after
Closing be employed by Century Marketing International, LLC) authorized to work in the United
States then primarily engaged in the Business. For purposes of this Section 8.4(a),
“substantially all” shall mean the then-current number of all of Sellers’ employees so employed
less no more than ten (10). The terms and conditions of employment shall be comparable in the
aggregate to the terms and conditions of their employment with Sellers as of such date. Each such
employee who is employed by Sellers on the Closing Date and who actually transfers to employment
with Buyer (or any Affiliate designated by Buyer) at or after the Closing Date as a result of an
offer of employment made by Buyer is hereafter referred to as a “Hired Employee.” Buyer
shall have no obligation to hire any other employees of Seller after the Closing Date.

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          (b) Transition. The employment by Sellers of the Hired Employees shall end at the
Closing and the employment of the Hired Employees by Buyer shall commence immediately after the
Closing. The terms of employment with Buyer (or Buyer’s Affiliates) shall be as mutually agreed to
between each Hired Employee and Buyer (or Buyer’s Affiliate, as the case may be), subject to the
provisions of Section 8.4(a). Buyer shall have no obligation with respect to payments of
salary, compensation, wages, health or similar benefits, commissions, overtime hours, bonuses
(deferred or otherwise), severance, stock or stock options or any other sums due to any Hired
Employee that accrued before the Closing Date, except as set forth in this Section 8.4 or
Section 8.5. Where a bonus relates to a period which commenced before, but ends after, the
Closing Date, Sellers shall be responsible for the pro rata portion of such bonus relating to the
period prior to the Closing Date. Sellers will be fully responsible for all amounts payable to or
claims made by any employee, for all termination payments,
redundancy compensation and severance pay. In addition, Sellers will be fully responsible for
all amounts owing to Hired Employees prior to Closing.

          (c) Seniority. Buyer shall grant Hired Employees seniority rights (such as seniority
for vacation) based on their service with Sellers. Buyer shall credit Hired Employees with the
vacation, sick and holiday banks they had at the time of termination from Sellers, and Sellers
shall reimburse Buyer at Closing for the liability of the total vacation, sick and holiday banks
credited to the Hired Employees.

          (d) Personnel Files. Sellers agree that they will allow Buyer to take custody of and
maintain all personnel files of the Hired Employees currently in possession of Sellers, except
confidential medical files. Buyer agrees to give Sellers access to said files, during normal
business hours, and to provide copies when requested, and to assist Sellers when necessary to
respond to or defend a claim or otherwise take an action which necessitates access to the files.

          (e) Workers’ Compensation. Sellers are and shall be fully responsible and liable for
all workers’ compensation benefits payable to Sellers’ employees for any claim for such benefits
arising as the result of an injury or occupational disease sustained while employed by Sellers.
However, on reasonable notice and during normal business hours, Buyer shall make its employees
available to Sellers for purposes of defending workers’ compensation claims by employees.

          (f) Cooperation. Buyer shall cooperate with Sellers in making employees and records
available, upon reasonable notice, to assist Sellers in defending any claims brought against them
by current or former employees.

          (g) Third Party Beneficiary. No provision in this Agreement shall create any
third-party beneficiary or other right in any Person (including any beneficiary or dependent
thereof) for any reason, including in respect of continued, resumed or new employment with Buyer
(or any Affiliate of Buyer) or in respect of any benefits that may be provided, directly or
indirectly, under any plan or arrangement maintained by Sellers, Buyer or any Affiliate. Except as
otherwise expressly provided in this Agreement, Buyer is under no obligation to hire any employee
of Sellers, provide any employee with any particular benefits, or make any payments or provide any
benefits to those employees of Sellers whom Buyer chooses not to employ.

     8.5 Employee Benefit Plans.

          (a) Service Crediting. Service by Hired Employees with Sellers shall be considered
service with Buyer for purposes of determining vesting participation and benefit eligibility (but
not for purposes of accruals or benefits) under Buyer’s employee benefit plans.

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          (b) Welfare Plans. Sellers shall maintain health, dental, life, short and long term
disability, and supplemental benefit insurance for the Hired Employees under the Seller Plans in
effect on the Closing Date until the earlier of (i) the date on which Buyer notifies Sellers of its
intent to terminate the Seller Plans or as soon as practicable thereafter, or (ii) December 31,
2005. Buyer shall be responsible for administering such Seller Plans (the “Continued Welfare
Plans”) for periods beginning on or after the Closing Date, including filing any necessary
paperwork with any applicable Governmental Body with respect to plan years ending on or after the
Closing Date, and shall be responsible for all costs and expenses incurred with respect to Hired
Employees from the Closing Date until the Continued Welfare Plans are terminated.

          (c) Deductibles and Out-of-Pocket Payments. If Buyer elects to place any of the Hired
Employees in its employee benefit plans before January 1, 2006, Buyer shall credit deductibles and
out-of-pocket amounts paid during the current year by such Hired Employees under Seller Plans
against deductibles and out-of-pocket maximums under Buyer’s employee benefit plans.

          (d) COBRA. Buyer agrees to assume all COBRA obligations of Sellers with respect to
Sellers’ group health plans as they relate to the Hired Employees from and after the Closing Date.

          (e) TEP Savings Plans. Buyer agrees that its mirror 401(k) Plan and trust will accept
roll-overs of all account balances in TEP’s Savings Plan and associated trust which are
attributable to the Hired Employees.

     8.6 Use of Name. From and after the Closing Date, no Seller or any of its Affiliates
shall use the name “Transeastern Properties”, or any variation thereof, or any name using
the word Transeastern or any word that is similar in sound or appearance in the conduct of any
business. Promptly following the Closing, each Seller shall take all necessary actions to change
its corporate name to a name that does not include the name “Transeastern” or any part or
variation thereof and shall deliver to Buyer evidence of such name change within three (3) Business
Days.

     8.7 Filings with Governmental Bodies. From and after the Closing Date, Sellers and
Buyer shall act diligently and reasonably, and shall cooperate with each other, in making any
required filing or notification and in attempting to obtain any consents and approvals of any
Governmental Body required to be obtained by them in order to assign or transfer any Owned Property
Governmental Permits to Buyer and to assign to Buyer any pending applications for Owned Property
Governmental Permits, to permit the consummation of the transactions contemplated by this
Agreement, or to otherwise satisfy the conditions set forth in Section 9.4;
provided that Sellers shall not make any agreement or understanding affecting the Purchased
Assets, the Contributed Assets, or their assets or Business as a condition for obtaining any such
consents or approvals except with the prior written consent of Buyer. Buyer shall pay all fees and
expenses in connection with obtaining any consents and approvals from such Governmental Bodies.

     8.8 First Florida Title Company. Within fourteen (14) days of the Closing Date,
Sellers shall have caused First Florida Title Company to assign to Universal Land Title at no cost
all files relating to the issuance of a title policy for transactions which are not closed as of
such date.

     8.9 Cooperation on Bronson, Cummer, Heller and Independence Projects. Buyer and
Sellers acknowledge that the Bronson, Cummer, Heller and Independence projects will contain
commercial and/or multifamily parcels, which will be controlled by entities controlled by certain
of TEP’s owners (the “Related Owners”) after Closing. Buyer and Sellers shall cooperate to
develop these projects in a manner which is mutually beneficial to all components of each such
project. Without limitation, such cooperation shall include the granting of cross access and
drainage easements, execution of plats and development documents, dedication of common areas to the
applicable community

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development district, and proportionate representation on the board of
directors of the community development district.

     8.10 Coral Lakes Construction.Buyer shall cooperate with Sellers in making construction supervisory employees available,
upon reasonable notice, to assist Sellers in the construction of homes on the Coral Lakes Lots.
Buyer shall retain the subcontractors for such construction. Sellers shall reimburse Buyer on a
monthly basis for all costs incurred by Buyer, subject to provision by Buyer of customary
documentation. Buyer shall afford Sellers the right to inspect progress and confirm the
appropriateness of any draw requests. Sellers shall be responsible for the sale of homes to be
constructed on the Coral Lakes Lots and shall be entitled to retain all proceeds from the sale of
such homes. From such proceeds, Sellers shall pay to Buyer the amount of the net profits
anticipated to be received from the sale of such homes as shown in the Projections within thirty
(30) days of the closing of such sale.

     8.11 Life Insurance. From and after the date hereof, Arthur J. Falcone shall
cooperate with Buyer in obtaining life insurance on his life with Buyer, as beneficiary; provided
that Buyer shall be responsible for all costs in connection therewith. Such cooperation shall not
include restrictions on any activity.

     8.12 Maintenance of Net Worth. Buyer shall maintain a net worth in compliance with
the financing terms of the term sheet attached hereto as Schedule 10.5.

     8.13 Cummer. Sellers agree to cause the current owner of the overall metes and bounds
legal description encompassing, inter alia, Cummer 1400, Cummer 1044 and Cummer 691 (collectively
“Cummer”) to continue to hold title to the common areas, roadways, conservation areas,
elementary school site, and activity center site located north of s.r. 210 and will convey each of
the foregoing tracts to the Community Development District to be created for Cummer, the applicable
homeowners association, and/or school board, as the case may be, as soon as the foregoing grantees
are created and ready to receive title thereto, in accordance with the DRI application and order,
once issued. The conveyance shall be accomplished in separate parts and as each grantee becomes
ready. The size and location of the foregoing tracts are shown on the Map H Conceptual Master Plan
in Schedule 5.10(B) attached hereto are approximate and may change from time to time in
accordance with the DRI application and order, once issued.

     8.14 Cummer 1044. The Owner under the land bank agreement for Cummer 1044 (the
“Cummer 1044 Land Bank”) shall hold title in such Cummer 1044 Land Bank to all of the
common areas, roadways, conservation areas, school sites, and recreation tracts located within
Cummer south of s.r. 210, which sites shall have a value of One Hundred Dollars ($100.00). The
foregoing tracts shall be conveyed to the Community Development District to be created for Cummer,
the applicable homeowners association, and/or school board as the case may be, when the first Lots
are conveyed from the Cummer 1044 Land Bank if the foregoing grantees are created and ready to
receive the title thereto. If the foregoing grantees are not created and ready to receive title,
the Cummer 1044 Land Bank shall continue to hold said tracts and shall convey them to the foregoing
grantees once they are created and ready to receive title. The foregoing conveyances shall be
accomplished in separate parts and as each grantee becomes ready. The size and location of the
foregoing tracts are shown on the Map H Conceptual Master Plan for Cummer included in Schedule
5.10(B) attached hereto are approximate and may change from time to time in accordance with the
DRI application and order, once issued.

     8.15 Kendall Commons (Vizcaya). Sellers shall use their good faith efforts to cause the T-Plat for Kendall Commons
(otherwise known as “Vizcaya”) to be revised to avoid the tree island in the southwest
corner of the site and to submit same to Miami-Dade County for approval by June 24, 2005 and shall
diligently pursue the county’s approval of the same.

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ARTICLE IX

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

     The obligations of Buyer under this Agreement shall, at the option of Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:

     9.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have been
no breach by Sellers in the performance of any of their covenants and agreements herein; each of
the representations and warranties of Sellers contained or referred to herein shall be true and
correct in all respects on the Closing Date as though made on the Closing Date, except for (A)
changes therein specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Buyer or any transaction permitted by this Agreement or (B)
those breaches or inaccuracies that could not reasonably be expected to have a Material Adverse
Effect; and there shall have been delivered to Buyer a certificate to such effect, dated the
Closing Date, signed by the Chief Executive Officer of TEP. To the extent that at the Closing
Sellers deliver to Buyer a written notice specifying in reasonable detail the breach by Sellers of
any of the representations or warranties of Sellers contained herein, and nevertheless Buyer
proceeds with the Closing, Buyer shall be deemed to have waived any rights or remedies it may have
against Sellers by reason of the breach of any such representations or warranties to the extent
described in such notice.

     9.2 No Changes or Destruction of Property. Between the date hereof and the Closing
Date, there shall have been (a) no Material Adverse Change; and (b) no damage to the assets or
properties of Sellers by fire, flood, casualty, act of God or the public enemy or other cause,
regardless of insurance coverage for such damage unless such insurance has made Sellers whole, in
excess of Five Hundred Thousand Dollars ($500,000.00) in the aggregate; and there shall have been
delivered to Buyer a certificate to such effect, dated the Closing Date and signed on behalf of
Sellers by the Chief Executive Officer of Sellers.

     9.3 No Restraint or Litigation. No action, suit, investigation or Proceeding shall
have been instituted or threatened to restrain or prohibit or otherwise challenge the legality or
validity of the transactions contemplated hereby.

     9.4 Necessary Governmental Approvals. The parties shall have received all approvals
and actions of or by all Governmental Bodies which are necessary to consummate the Closing of the
purchase and sale transactions contemplated hereby, which are either specified in Schedule
5.1(C) or otherwise required to be obtained prior to Closing by applicable Requirements of Laws
or which are necessary to prevent a Material Adverse Change. Notwithstanding the foregoing, the
parties have acknowledged in Section 8.7 that approval of the assignment of all Owned
Property Governmental Permits may not be obtained by Closing, that such failure shall not
constitute a valid objection by Buyer to not proceed with Closing and that the parties shall work
together after Closing to obtain approval of such assignments.

     9.5 Necessary Consents. Sellers shall have received consents, in form and substance
reasonably satisfactory to Buyer, to the transactions contemplated hereby from (a) the other
parties to all contracts, leases and agreements assigned to Buyer hereunder, including those listed
on Schedule 5.17, (b) the architects who prepared the plans for each project listed on
Exhibit I to Schedule 5.12(A), (c) the party who prepared the brochures/renderings
for each project listed on Exhibit I to Schedule 5.12(B), and (d) which are
otherwise necessary to prevent a Material Adverse Change.

     9.6 Minimum Net Worth. The Closing Date Net Worth, as estimated in the certificate
delivered pursuant to Section 3.2 shall be no less than One Hundred Million Dollars
($100,000,000.00).

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     9.7 Closing Deliveries. Sellers shall have delivered all documents and instruments
required pursuant to Sections 4.4, 4.5, 4.6, 4.8,
4.9, and 4.10.

     9.8 Approval by Shareholders or Members of Sellers. This Agreement and the
transactions it contemplates shall have been approved and adopted by such vote of the shareholders
or members, as applicable, of Sellers entitled to vote thereon or as is required to approve such
transactions, and shall have otherwise been approved as required by law and the Charter Documents
of each Seller.

     9.9 Releases. Sellers shall have obtained releases of all Encumbrances on the Owned
Real Property, other than Permitted Encumbrances, including, subject to payments by Buyer of
Sellers’ debt set forth on Schedule 3.1(B), releases of each mortgage of record and
reconveyances of each deed of trust with respect to each parcel of real property included in the
Purchased Assets, the Contributed Assets and Sellers’ security instruments. Sellers shall have
also obtained releases of all Encumbrances on all personal property included in the Purchased
Assets or the Contributed Assets, including, without limitation, the liens of Whirlpool
Corporation.

     9.10 Environmental Report. Any environmental site assessment report ordered by Buyer
with respect to all Seller Property shall not reflect any condition which would constitute a
violation of any Environmental Law which could reasonably be expected to have a Material Adverse
Effect, excepting such temporary conditions as could reasonably be expected to result from
development activities currently on-going at such property.

     9.11 Cummer West Property. Sellers shall have entered into an Option Agreement with
the owner of the Cummer West Property described on Exhibit M attached hereto in form and
substance reasonably acceptable to Buyer.

     9.12 Coral Lakes. As to all Lots in the developments identified as Coral Lake I and II except for the Coral
Lakes Lots, and except with regard to the six (6) lots in Coral Lakes I which have been designated
for construction of model homes (the “Model Homes”), Sellers shall, at their cost, remove
any foundations that have been constructed and remediate all adverse soil conditions pursuant to a
method or methods approved by Buyer’s geotechnical consultants and the City of Cape Coral. In the
course of remediation, all substandard soil shall be removed and mixed, blended and/or replaced
with clean and proper fill in 12” lifts, and the soil shall be compacted to satisfy all applicable
industry standards. With respect to the Model Homes, Sellers shall provide Buyer with third party
certified soil tests confirming that the Model Homes meet applicable industry standards, and if
said results do not meet applicable industry standards, Sellers shall remediate the soil on the
Model Homes using the soil injection process used on the Coral Lakes Lots. Sellers shall be
entitled to retain the proceeds of any surplus fill not used in the foregoing remediation. All
remediation work shall be supervised and approved by Buyer’s geotechnical consultants and the City
of Cape Coral, if the city elects to do so. Sellers shall diligently commence and continuously
pursue said remediation using their commercially reasonable efforts and shall cause the remediation
to be completed no later than December 31, 2006. Sellers and their engineers and consultants shall
coordinate their remediation work with Buyer so as to complete the remediation work on those Lots
scheduled for immediate vertical construction first. At Closing, Buyer and the owners of the Coral
Lakes I and II developments will execute easements in form and substance to be agreed upon by the
parties necessary to allow Sellers to perform the work described in this Section.

     9.13 Payments of Accounts Receivable. All Accounts Receivable due to Sellers from
Affiliates, all intercompany receivables due to Sellers and all Accounts Receivable due to Sellers
from officers and directors shall have been paid in full.

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     9.14 CMI Marketing. Buyer shall have either executed a marketing agreement with
Century Marketing International, LLC or in the event such agreement is not executed, the employees
of Sellers responsible for community pre-launch marketing activities shall have become employees of
Buyer.

     9.15 Employment Matters. Sellers shall have no pending or to the Knowledge of
Sellers, threatened litigation relating to overtime hours involving any of its employees. All such
litigation pending prior to the Closing shall have been dismissed with prejudice and all rights to
appeal shall have expired.

     9.16 Cummer 1400 Property. Buyer shall have entered into an agreement with the
appropriate Seller to purchase the Cummer 1400 Property described on Exhibit L attached
hereto on terms and conditions reasonably satisfactory to Buyer.

     9.17 Live Oak. Sellers shall have remedied any violations relating to the Army Corps
of Engineers (the “ACOE”) Permit No. 200103845 (IP-JPF) and any other violations alleged
by any other Governmental Body having jurisdiction over the subject Real Property, including the
payment of any fees or penalties. Sellers shall have provided Buyer with the Notice of Violation
from the ACOE and any correspondence in connection therewith. Sellers shall remain responsible for
any costs of remediation or expenses
associated with such violation after the Closing Date and any such remediation performed by
Sellers shall be acceptable to the ACOE.

     9.18 Construction on Lots. Sellers shall have ceased vertical construction on any Lot
which they do not own and Sellers shall have acquired fee title to such Lots.

     9.19 Cooperation Agreements. Sellers and the applicable Related Owner of each of the
Bronson, Cummer, Heller and Independence Projects shall have entered into a Cooperation Agreement
for each of their respective projects, which shall outline the matters as to which the parties will
be required to cooperate to develop these projects in a manner which is mutually beneficial to all
components of the applicable project.

ARTICLE X

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

     The obligations of Sellers under this Agreement shall, at the option of Sellers, be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions:

     10.1 No Misrepresentation or Breach of Covenants and Warranties. There shall have
been no breach by Buyer in the performance of any of its covenants and agreements herein; each of
the representations and warranties of Buyer contained or referred to herein shall be true and
correct in all respects on the Closing Date as though made on the Closing Date (except to the
extent that such representations and warranties expressly speak of another date, in which case such
representations and warranties shall be true and correct as of such other date), except for (A)
changes therein specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Sellers or any transaction permitted by this Agreement or (B)
those breaches or inaccuracies that could not reasonably be expected to have a Material Adverse
Effect; and there shall have been delivered to Sellers a certificate to such effect, dated the
Closing Date and signed on behalf of Buyer by an authorized officer of Buyer. To the extent that
at the Closing Buyer delivers to Sellers a written notice specifying in reasonable detail the
breach by Buyer of any of the representations or warranties of Buyer contained herein, and
nevertheless Sellers proceed with the Closing, Sellers shall be deemed to have waived any

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rights or
remedies they may have against Buyer by reason of the breach of any such representations or
warranties to the extent described in such notice.

     10.2 No Restraint or Litigation. No action, suit or Proceeding by any Governmental
Body shall have been instituted or threatened to restrain, prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.

     10.3 Closing Deliveries. Buyer shall have delivered all documents, instruments and
funds required pursuant to Sections 4.2 and 4.3 or any other provision
hereof.

     10.4 Minimum Net Worth. At Closing, Buyer shall have a net worth of no less than One Hundred Fifty Million Dollars
($150,000,000.00).

     10.5 Financing Concurrent with the execution of this Agreement, Buyer shall have
entered into a commitment letter with Deutsche Bank AG or one of its affiliates providing for a
minimum financing of Seven Hundred Million Dollars ($700,000,000.00) in accordance with the terms
of the term sheet attached hereto as Schedule 10.5, and Buyer shall have paid the
applicable commitment fee therefor.

     10.6 Cooperation Agreements. Buyer and the applicable Related Owner of each of the
Bronson, Cummer, Heller and Independence Projects shall have entered into a Cooperation Agreement
for each of their respective projects, which shall outline the matters as to which the parties will
be required to cooperate to develop these projects in a manner which is mutually beneficial to all
components of the applicable project.

ARTICLE XI

INDEMNIFICATION AND POST-CLOSING REMEDIES

     11.1 Indemnification by Sellers.

          (a) Sellers agree to indemnify and hold harmless each Buyer Group Member from and against any
and all Losses and Expenses incurred by such Buyer Group Member in connection with or arising from:

               (i) subject to the last sentence of Section 7.1 and Section 9.1, any breach of
any warranty or the inaccuracy of any representation of Sellers contained or referred to in this
Agreement or any certificate delivered by or on behalf of Sellers pursuant hereto or in any Seller
Ancillary Agreement;

               (ii) subject to the provisions of the Warranty Administration Agreement, any Pre-Closing
Warranty Claims;

               (iii) any breach by any Seller of any of its covenants or agreements, or any failure of any
Seller to perform any of its obligations, in this Agreement or in any Seller Ancillary Agreement,
in each case to be performed after the Closing;

               (iv) the failure of Sellers to pay, perform or discharge any Excluded Liability;

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               (v) any loss or expense in connection with any Lot for which there is an unresolved title
objection pursuant to Section 7.7;

               (vi) notwithstanding any disclosure with respect to Section 5.12 (or any failure to
make a required disclosure), any claim alleging infringement, misappropriation or other violation
of any third party Intellectual Property right relating to the Intellectual Property and/or Owned
Software used by Sellers in the Business during the five (5) years preceding the Closing Date; or

               (vii) any loss or expense in connection with any soil condition at any Lot in Coral Lakes I or
II (other than the Coral Lakes Lots) or at any Model Home.

provided, however that:

	 	(1)	 	Sellers shall not be required to
indemnify and hold harmless Buyer under clause (i) of this
Section 11.1 with respect to Losses and Expenses
incurred by Buyer Group Members (other than Losses and Expenses
incurred as a result of inaccuracies of the representations and
warranties contained in Sections 5.1, 5.2,
5.7, 5.14 (excepting those matters covered by
the Policy), and 5.25, as to which this proviso shall
have no effect) unless the aggregate amount of such Losses and
Expenses subject to indemnification by Sellers exceeds One
Hundred Thousand Dollars ($100,000.00), and once aggregate
Losses exceed One Hundred Thousand Dollars ($100,000.00),
Sellers will be liable for all Losses (i.e. from the first
dollar) and Expenses, subject to the limitation contained in
subclause (2) below; provided that, solely for purposes
of calculating the amount of damages incurred by any Buyer Group
Member and whether the threshold for such damages is reached, no
Material Adverse Effect or other materiality qualification to a
representation or warranty shall be considered;
	 
	 	(2)	 	in no event shall the aggregate
amount required to be paid by Sellers under clauses (i) and (ii)
of Section 11.1(a) (other than with respect to
Sections 5.1, 5.2, 5.7,
5.10 (excepting 5.10(A) and 5.10(B)), 5.14
(excepting those matters covered by the Policy), 5.25,
5.28, and 5.30) exceed Thirty-Five Million
Dollars ($35,000,000.00);
	 
	 	(3)	 	if a claim for indemnification
arises from or in connection with the fraudulent, willful or
intentional misrepresentation by any Seller of any
representation or warranty in this Agreement or any Ancillary
Agreement, the maximum aggregate amount that Sellers,
collectively, will be required to pay shall not be subject to
any limit;
	 
	 	(4)	 	if Buyer’s claim for
indemnification arises because the warranty expenses resulting
from the Warranty Administration Agreement (after recourse to
the other sources for payment of such expenses described in the
Warranty Administration Agreement) exceed the warranty reserves
set forth in the Financial Statements, the

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	 	 	 	maximum aggregate
amount that Sellers, collectively, will be required to pay shall
not be subject to any limit; and
	 
	 	(5)	 	if Buyer’s claim for
indemnification arises because of any loss or expense in
connection with the soil condition at any Lot in Coral Lakes I
or II (other than the Coral Lakes Lots) or at any Model Home,
the maximum aggregate amount that Sellers, collectively, will be
required to pay shall not be subject to any limit.

          (b) The indemnification provided for in Section 11.1(a) shall terminate three (3)
years after the Closing Date (and no claims shall be made by any Buyer Group Member under
Section 11.1(a) thereafter), except that the indemnification by Sellers shall continue as
to:

               (i) the representations and warranties set forth in Sections 5.1, 5.2,
5.7, 5.10 (excepting 5.10(A) and 5.10(B)), 5.14 (excepting those matters
covered by the Policy), 5.25, 5.28 and 5.30 and the covenants of Sellers
set forth in Sections 8.6 and 11.1(a)(vii) as to which no time limitation shall
apply;

               (ii) the covenants set forth in Section 8.3 and Section 11.1(a)(vi) which
shall survive until the expiration of the relevant statutory period of limitations applicable to
the underlying claim, giving effect to any waiver, mitigation or extension thereof;

               (iii) the covenants set forth in Sections 11.1(a)(iii) and (iv) (as to which the
statute of limitations applicable to such post-closing breach shall apply);

               (iv) the covenant set forth in Section 13.6 which shall survive until the expiration
of the six-year period referenced therein;

               (v) the covenant set forth in Section 8.1 as to which the indemnification provided for
in this Section 11.1 shall terminate one (1) year after the expiration of the
noncompetition period provided for therein; and

               (vi) any Loss or Expense of which any Buyer Group Member has notified Sellers in accordance
with the requirements of Section 11.3 on or prior to the date such indemnification would
otherwise terminate in accordance with this Section 11.1, as to which the obligation of
Sellers shall continue until the liability of Sellers shall have been determined pursuant to this
Article 11 and Sellers shall have reimbursed all Buyer Group Members for the full amount of
such Loss and Expense in accordance with this Article 11.

          (c) Any Loss or Expense suffered by Buyer or any Buyer Group Member shall be reimbursed and
satisfied:

               (i) first, by proceeding against any third party, including any materialman, manufacturer or
subcontractor; and, if full reimbursement is not received by Buyer within thirty (30) days of
Buyer’s first demand and Buyer has used its diligent efforts with respect thereto; then

               (ii) second, by using reasonable efforts to seek payment under any applicable insurance
policies, including any title insurance policies, obtained by Sellers covering such Loss or
Expense; and, if full reimbursement is not received by Buyer within thirty (30) days of Buyer’s
first demand and Buyer has used its diligent efforts with respect thereto; then

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               (iii) third, by using the warranty reserve on the Closing Date Balance Sheet, to the extent
that the claim relates to the Warranty Administration Agreement; then

               (iv) fourth, if Buyer or any Buyer Group Member have claims which have not been satisfied
under subclauses (i), (ii) or (iii) above and which exceed One Hundred Thousand Dollars
($100,000.00) (except for claims pursuant to Sections 5.1, 5.2, 5.7,
5.14 (excepting those matters covered by the Policy) and 5.25 as to which no such
threshold shall apply), then by drawing upon the Indemnity Letter of Credit for the full
unsatisfied amount of such claim; then

               (v) fifth, by set-off of up to Twenty Million Dollars ($20,000,000.00) against the sums then
due and owing and unpaid to Sellers as Earn-Out Payments or Entitlement Payments pursuant to
Section 3.6 hereof; and

               (vi) sixth, by proceeding directly against Sellers.

               In the event that Sellers shall make any payment under this Section, Sellers shall be
subrogated to the rights of Buyer against any third party, including materialmen, manufacturers and
subcontractors against which Buyer had recourse for such claim but from which Buyer did not receive
payment.

          (d) Notwithstanding anything in the foregoing to the contrary, (i) any Losses or Expenses
incurred by Buyer as a result of a breach of the representations and warranties contained in
Section 5.23 shall be deemed to affect the rights of Sellers to payment under Section
3.6(a) but are not to be a basis for a claim under this Section 11.1 and (ii) any
Losses or Expenses incurred by Buyer as a result of warranty claims under Section 5.24
shall be reimbursed under this Section 11.1 and shall not be deemed to affect Sellers’
right to payment under Section 3.6(a).

     11.2 Indemnification by Buyer.

          (a) Buyer agrees to indemnify and hold harmless each Seller Group Member from and against any
and all Losses and Expenses incurred by such Seller Group Member in connection with or arising
from:

               (i) any breach of any warranty or the inaccuracy of any representation of Buyer contained or
referred to in this Agreement or in any certificate delivered by or on behalf of Buyer pursuant
hereto or in any Buyer Ancillary Agreement;

               (ii) any breach by Buyer of any of its covenants or agreements, or any failure by Buyer to
perform any of its obligations, in this Agreement or in any Buyer Ancillary Agreement, in each
case, to be performed after the Closing;

               (iii) the failure of Buyer to pay, perform or discharge the Assumed Liabilities;

               (iv) any claim raised or filed by any Hired Employee if such claim arises as a result of the
termination or other adverse action of Buyer subsequent to its purchase of the Purchased Assets,
any claim incurred against or by the Continued Welfare Plans after the Closing, including claims
resulting from administrative errors or failures (except for those claims arising or that result
from actions or omissions prior to Closing), or any claim arising out of any failure to properly
administer COBRA under Seller Plans after the Closing Date; or

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               (v) any loss or expense in connection with Buyer’s construction of homes on the Coral Lakes
Lots, unless caused by Sellers’ gross negligence or willful misconduct.

provided, however that Buyer shall not be required to indemnify and hold harmless
under clause (i) of this Section 11.2(a) with respect to Losses and Expenses incurred by
Seller Group Members (other than Losses and Expenses incurred as a result of inaccuracies of the
representations and warranties contained in Section 6.3 as to which this proviso shall have
no effect) unless the aggregate amount of such Losses and Expenses subject to indemnification by
Buyer exceeds One Hundred Thousand Dollars
($100,000.00), and once the aggregate Losses exceed One Hundred Thousand Dollars ($100,000.00),
Buyer will be liable for such Losses (i.e. from the first dollar) and Expenses.

          (b) The indemnification provided for in Section 11.2(a) shall terminate three (3)
years after the Closing Date (and no claims shall be made by any Seller Group Member under
Section 11.2(a) thereafter), except that the indemnification by Buyer shall continue as to:

               (i) the representations and warranties set forth in Sections 6.1 and
6.2, as to all of which no time limitation shall apply;

               (ii) the representations and warranties set forth in Section 5.7 and covenants set
forth in Section 8.3 which shall survive until the expiration of the relevant statutory
period of limitations applicable to the underlying claim, giving effect to any waiver, mitigation
or extension thereof;

               (iii) the covenants set forth in Sections 11.2(a)(ii) and 11.2(a)(iii)
as to which no time limitation shall apply;

               (iv) the covenant set forth in Section 13.6 which shall survive until the expiration
of the six-year period referenced therein; and

               (v) any Loss or Expense of which any Seller Group Member has notified Buyer in accordance with
the requirements of Section 11.3 on or prior to the date such indemnification would
otherwise terminate in accordance with this Section 11.2, as to which the obligation of
Buyer shall continue until the liability of Buyer shall have been determined pursuant to this
Article 11 and Buyer shall have reimbursed all Seller Group Members for the full amount of
such Loss and Expense in accordance with this Article 11.

     11.3 Notice of Claims Any Buyer Group Member or Seller Group Member (the
“Indemnified Party”) seeking indemnification hereunder shall give to the party obligated to
provide indemnification to such Indemnified Party (the “Indemnitor”) a notice (a “Claim
Notice”) describing in reasonable detail the facts giving rise to any claim for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of this Agreement or any
other agreement, document or instrument executed hereunder or in connection herewith upon which
such claim is based; Buyer shall further notify Sellers upon proceeding under Section
11.1(c)(i) and thereafter under each of Sections 11.1(c)(ii), 11.1(c)(iii),
11.1(c)(iv), 11.1(c)(v) and 11.1(c)(vi); provided that a Claim Notice in
respect of any pending or threatened action at law or suit in equity by or against a third Person
as to which indemnification will be sought (each such action or suit being a “Third Person
Claim”) shall be given promptly after the action or suit is commenced; provided further that
failure to give such notice shall not relieve the Indemnitor of its obligations hereunder except to
the extent it shall have been prejudiced by such failure.

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     11.4 Loss Calculation. In calculating any Loss or Expense there shall be deducted any
insurance recovery in respect thereof (and no right of subrogation shall accrue hereunder to any
insurer).

     11.5 Third Person Claims.

          (a) Promptly after receipt by an Indemnified Party of notice of the assertion of a Third
Person Claim against it, such Indemnified Party shall give notice to the Indemnitor of the
assertion of such Third Person Claim; provided, however, that the failure to notify
the Indemnitor will not relieve the Indemnitor of any liability that it may have to any Indemnified
Party.

          (b) If an Indemnified Party gives notice to the Indemnitor pursuant to this Section of the
assertion of a Third Person Claim, the Indemnitor shall be entitled to participate in the defense
of such Third Person Claim and, to the extent that it wishes (unless (i) the Indemnitor is also a
Person against whom the Third Person Claim is made and the Indemnified Party determines in good
faith that joint representation would be inappropriate or (ii) the Indemnitor fails to provide
reasonable assurance to the Indemnified Party of its commitment and financial capacity to defend
such Third Person Claim and provide indemnification with respect to such Third Person Claim), to
assume the defense of such Third Person Claim with counsel satisfactory to the Indemnified Party
(except to the extent the Indemnified Party has other issues involved in the same dispute or to the
extent resolution of the Third Person Claim could affect liability of the Indemnified Party in
other periods or in respect of other issues). After notice from the Indemnitor to the Indemnified
Party of its election to assume the defense of such Third Person Claim, and conditioned upon
continuing satisfaction of conditions (i) and (ii) of this Section, the Indemnitor shall not, so
long as it diligently conducts such defense, be liable to the Indemnified Party under this Section
for any fees of other counsel or any other expenses with respect to the defense of such Third
Person Claim, in each case subsequently incurred by the Indemnified Party in connection with the
defense of such Third Person Claim. No compromise or settlement of such Third Person Claims may be
effected by the Indemnitor without the Indemnified Party’s consent unless (A) there is no finding
or admission of any violation of Requirement of Law or any violation of the rights of any Person;
(B) the sole relief provided is monetary damages that are paid in full by the Indemnitor; (C) the
settlement could not give rise to any other liability of the Indemnified Party; and (D) the
Indemnified Party shall have no liability or be subject to any compromise or restriction with
respect to any such compromise or settlement. If notice is given to an Indemnitor of the assertion
of any Third Person Claim and the Indemnitor does not, within ten (10) Business Days after the
Indemnified Party’s notice is given, give notice to the Indemnified Party of its election to assume
the defense of such Third Person Claim, the Indemnitor will be bound by any determination made in
such Third Person Claim or any compromise or settlement effected by the Indemnified Party.

          (c) Notwithstanding the provisions of Section 13.6 hereof, each Seller hereby consents
to the nonexclusive jurisdiction of any court in which a proceeding in respect of a Third Person
Claim is brought against any Buyer Group Member for purposes of any claim that any Buyer Group
Member may have under this Agreement with respect to such proceeding or the matters alleged therein
and agree that process may be served on any Seller with respect to such a claim anywhere in the
world.

          (d) With respect to any Third Person Claim subject to indemnification under this Section: (i)
both the Indemnified Party and the Indemnitor, as the case may be, shall keep the other Person
fully informed of the status of such Third Person Claim and any related suit, claim, proceeding,
demand, order, investigation or request or demand for information at all stages thereof where such
Person is not represented by its own counsel; and (ii) the parties agree to render to each other
such assistance as they may reasonably require of each other and to cooperate in good faith with
each other in order to ensure the proper and adequate defense of any Third Person Claim.

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     11.6 Adjustment to Purchase Price. To the extent any payment under this Article
11 can be properly so characterized under applicable Tax law, it shall be treated by the
parties as an adjustment to the Purchase Price.

     11.7 Failure to Make Certain Payments. In the event that any payment due under this
Agreement is not paid when due, the amount of such non-payment shall begin to accrue interest on
the sixth (6th) day after written demand therefor by the other party at the rate of
eighteen percent (18%) per annum for each day thereafter that such payment shall remain unpaid. In
the event that any party shall fail to make any payment, including interest thereon as provided
herein, within forty-five (45) days of written demand therefor by the other party, such party shall
be deemed to be in default of this Agreement, and the entire unpaid balance of the subject payment
(or in the case of a failure to pay an installment of the Earn-Out Payments or the Entitlement
Payments, as applicable, the entire unpaid balance of the total Earn-Out Payments or the total
Entitlement Payments, as applicable, due under this Agreement) shall become immediately due and
payable, and such accelerated amount shall also accrue interest at the maximum rate allowed by law;
provided that no payment shall be accelerated hereunder if such payment is being contested
in good faith by a party, unless and until a final determination is adjudged against such party by
a court of competent jurisdiction.

     11.8 Exclusive Remedies. All claims after the completion of the Closing for breaches
of any representations or warranties in this Agreement or in any Ancillary Agreement or any breach
of covenant or other provision of this Agreement (other than a claim for specific performance or
injunctive relief) shall be made exclusively under and in accordance with this Article 11.

ARTICLE XII

TERMINATION AND PRE-CLOSING REMEDIES

     12.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the Closing Date:

          (a) by the mutual written consent of Buyer and Sellers;

          (b) by Buyer or Sellers if the Closing shall not have occurred on or before August 1, 2005 (or
such later date as may be mutually agreed to by Buyer and Sellers); provided,
however, that neither Sellers nor Buyer may terminate the Agreement pursuant to this clause
(b) if the Closing shall not have occurred by reason of the failure of such party to perform in all
material respects any of its or their respective covenants or agreements herein);

          (c) by Buyer in the event of any breach by any Seller of any of Sellers’ agreements,
representations or warranties contained herein and the failure of any Sellers to cure such breach
within fifteen (15) days after receipt of written notice from Buyer requesting such breach to be
cured, except for those breaches or inaccuracies that could not reasonably be expected to have a
Material Adverse Effect;

          (d) by Sellers in the event of any breach by Buyer of any of Buyer’s agreements,
representations or warranties contained herein and the failure of Buyer to cure such breach within
fifteen (15) days after receipt of written notice from Seller requesting such breach to be cured,
except for those breaches or inaccuracies that could not reasonably be expected to have a Material
Adverse Effect, and except that Buyer shall have no right to cure its failure to close upon the
purchase of the Purchased Assets by August 1, 2005;

80

 

          (e) by either Buyer or Sellers if the other party goes into liquidation, has an application or
order made for its winding up or dissolution, has a resolution passed or steps taken to pass a
resolution for its winding up or dissolution, becomes unable to pay its debts as and when they fall
due, or has a receiver, receiver and manager, administrator, liquidator, provisional liquidator,
official manager or administrator appointed to it or any of its assets;

          (f) by Buyer or Sellers if any Governmental Body shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;

          (g) by Buyer if any condition in Article 9 has not been satisfied as of the Closing
Date or if satisfaction of such a condition by such date is or becomes impossible (other than
through the failure of Buyer to comply with its obligations under this Agreement), and Buyer has
not waived such condition on or before such date;

          (h) by Sellers if any condition in Article 10 has not been satisfied as of the Closing
Date or if satisfaction of such a condition by such date is or becomes impossible (other than
through the failure of Sellers to comply with their obligations under this Agreement), and Sellers
have not waived such condition on or before such date; or

          (i) by Buyer upon receipt of advice from any Governmental Body that more than ten percent
(10%) of Lots will not be Fully Entitled within the time periods set forth in the Projections
provided by Sellers to Buyer.

     12.2 Notice of Termination. Any party desiring to terminate this Agreement pursuant
to Section 12.1 shall give written notice of such termination to the other parties to this
Agreement.

     12.3 Effect of Termination; Remedies; Treatment of the Deposit.

          (a) If this Agreement is terminated pursuant to this Article 12 all further
obligations of the parties under this Agreement (other than their obligations under Section
12.3, Sections 13.2, 13.10 and 13.12) shall be terminated without
further liability of any party to the other; provided that:

          (b) Sellers’ sole remedy for breach of this Agreement by Buyer before Closing after expiration
of the applicable cure period under Section 12.1 without cure shall be termination of this
Agreement pursuant to this Article 12 and retention of the Deposit by Sellers as Sellers’
liquidated damages. Except as otherwise expressly provided in this Agreement, each Seller waives
any and all other rights and remedies, at law or in equity, to which such Seller may otherwise be
entitled by reason of Buyer’s breach of this Agreement before Closing.

          (c) Except as provided in Section 12.1, and except as otherwise expressly provided in
this Agreement, Buyer’s sole remedy for breach of this Agreement by Sellers before Closing after
expiration of the applicable cure period under Section 12.1 without cure shall be
termination of this Agreement pursuant to this Article 12, return of the Deposit to Buyer
by Sellers under Section 12.3(c) below, plus the payment to Buyer of Five Million
Dollars ($5,000,000.00) by Sellers as Buyer’s liquidated damages. Notwithstanding the foregoing,
(i) in the event of a breach by Sellers of the Closing covenants set forth in Section
4.4(r), Buyer’s sole remedy shall be termination of this Agreement pursuant to this Article
12 and return of the Deposit to Buyer by Sellers under this Section 12.3(c) and (ii) in
the event of a breach by Sellers of the Closing covenants set forth in Section 4.6(b) as a
result of the failure of
the Owners of “Westyn Bay” or “Legacy Park” to execute a “Consent of Owner” or the failure of
any Mortgagee to execute a SNDA, Buyer’s sole remedy shall be the receipt of Two Million Five
Hundred

81

 

Thousand Dollars ($2,500,000.00) as Buyer’s liquidated damages and the termination of this
Agreement pursuant to this Article 12 and return of the Deposit to Buyer by Sellers under
this Section 12.3(c). In addition to the foregoing, Buyer shall not be entitled to the
receipt of the Five Million Dollars ($5,000,000.00) referred to above if the termination of this
Agreement is a result of the failure of Sellers to satisfy the condition set forth in Section
4.4(j) due to the failure of any single Division President or Division Manager identified by
Buyer (other than Neil Eisner, Jan Ickovic, Daniel Andreacci or Robert Krief) to enter into
Employee Agreements. Except as provided in Section 12.3(e) and (f), and except as
otherwise expressly provided in this Agreement, Buyer waives any and all other rights and remedies,
at law or in equity, to which Sellers may otherwise be entitled by reason of Buyer’s breach of this
Agreement before Closing.

          (d) Sellers shall be entitled to retain the Deposit upon termination of this Agreement
pursuant to this Article 12 if they have terminated the Agreement (i) pursuant to
Sections 12.1(a), (b), or (d), (ii) as a result of the liquidation of Buyer
or (iii) as a result of Buyer’s failure to satisfy the conditions set forth in Article 10
of this Agreement which have not otherwise been waived by Sellers at Closing.

          (e) Sellers shall immediately return the Deposit by wire transfer of immediately available
funds to an account designated by Buyer in the event that Buyer terminates this Agreement as a
result of a breach by Sellers of one of its covenants contained herein which could reasonably be
expected to have a Material Adverse Effect, excepting Section 7.2(a).

          (f) In addition to any payments and damages to which Buyer may be entitled pursuant to
Section 12.3(a) in the event that (x) Buyer is prepared to consummate the transactions
contemplated hereby and Sellers are unwilling or unable to perform their obligations at the Closing
and (y) Sellers agree to sell the Business (whether through sale of assets, stock, merger or other
business combination) to another Person on or prior to June 30, 2006, then Sellers shall pay to
Buyer promptly upon the consummation of such transaction by wire transfer of immediately available
funds the amount, if any, by which the total consideration received or to be received (assuming the
maximum amount of any deferred consideration will be received) by Sellers or its Affiliates
(excluding any sums to be paid to Affiliates of Sellers for the purchase of Lots or other developed
or undeveloped real property under “land banking” or other option arrangements but including any
purchase premium reasonably allocated thereto) as a result of such transaction, including (i) with
respect to any covenant not to compete, employment agreements or similar arrangements, (ii) the
amount of any indebtedness for borrowed money or similar liabilities discharged or assumed by such
Person and (iii) the maximum amount of any contingent or deferred consideration payable by such
Person, exceeds the Purchase Price, calculated as if the Closing had occurred as of the Balance
Sheet Date.

     12.4 Special Termination. In the event that TOUSA Homes LP and Falcone/Ritchie LLC
are unable, within thirty (30) days after the date of this Agreement (the “Negotiation
Period”) to reach an agreement, after good faith negotiations during such period, regarding the
final terms and conditions which are acceptable to both parties in their sole and absolute
discretion, regarding the acquisition by Falcon/Ritchie LLC of a fifty percent (50%) equity
interest in TE/TOUSA, LLC in exchange for the contribution of the Contributed Assets, then (A) the
portion of the Purchase Price as described in Section 3.1(a) shall be increased by the
difference between Seventy-Five Million Dollars ($75,000,000.00) and the cost basis of the
Contributed Assets for a total of Four Hundred Seventeen Million One Hundred Forty-Two Thousand
Five Hundred Dollars ($417,142,500.00), and (B) Buyer shall have the extension rights set forth
below. The foregoing negotiations shall be based on the terms set forth in Schedule 12.4.

               (i) If the parties are unable to reach an agreement within the Negotiation Period, Buyer shall
have the right to extend the Closing Date to August 31, 2005 (the “First Extension Period”)
in order to find a suitable replacement equity partner;

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               (ii) If TOUSA Homes LP and Falcone/Ritchie LLC reach an agreement within the First Extension
Period, but Falcone/Ritchie LLC fails to convey the Contributed Assets to TE/TOUSA, LLC at or prior
to Closing, Buyer may extend the Closing Date to September 30, 2005 day period (the “Final
Extension Period”); and

               (iii) If, after the First Extension Period or the Final Extension Period, as the case may be,
Buyer is unable to find a suitable equity partner in TE/TOUSA LLC after diligent search, Buyer may
terminate this Agreement and Sellers shall return the Deposit paid hereunder.

ARTICLE XIII

GENERAL PROVISIONS

     13.1 Survival of Obligations. All representations, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement except as set forth in Article 11. Except as otherwise
provided herein, no claim shall be made for the breach of any representation or warranty contained
in Article 5 or 6 or under any certificate delivered with respect thereto
under this Agreement after the date on which such representations and warranties terminate as set
forth in this Section.

     13.2 Confidential Nature of Information. Buyer and each Seller agrees that it will
treat in confidence all documents, materials and other information which it shall have obtained
regarding the other parties during the course of the negotiations leading to the consummation of
the transactions contemplated hereby (whether obtained before or after the date of this Agreement),
the investigation provided for herein and the preparation of this Agreement and other related
documents, and, if the transactions contemplated hereby are not consummated, each party will return
to the other parties all copies of nonpublic documents and materials which have been furnished in
connection therewith. Such documents, materials and information shall not be communicated to any
third Person (other than, in the case of Buyer, to its counsel, accountants, financial advisors or
lenders, and in the case of Sellers to their counsel, accountants or financial advisors). No other
party shall use any confidential information in any manner whatsoever except solely for the purpose
of evaluating the proposed purchase and sale of the Purchased Assets; or acceptance of the
contribution of the Contributed Assets provided, however that after the Closing, Buyer may use or
disclose any confidential information with respect to or about Sellers or otherwise reasonably
related to the Business or the Purchased Assets or the Contributed Assets. The obligation of each
party to treat such documents, materials and other information in confidence shall not apply to any
information which (i) is or becomes available to such party from a source other than the other
party, (ii) is or becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law, judicial process or
the rules of any stock exchange on which such party’s securities are listed, but only to the extent
it must be disclosed, or (iv) such party reasonably deems necessary to disclose to obtain any of
the consents or approvals contemplated hereby.

     13.3 No Public Announcement. No party shall, without the approval of the other parties make any press release or other
public announcement concerning the transactions contemplated by this Agreement, except as and to
the extent that any such party shall be so obligated by law or the rules of any stock exchange, in
which case the other party shall be advised and the parties shall use their commercially reasonable
efforts to cause a mutually agreeable release or announcement to be issued; provided that the
foregoing shall not preclude communications or disclosures necessary to implement the provisions of
this Agreement or to comply with the accounting and Securities and Exchange Commission disclosure
obligations.

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     13.4 Notices. All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered when (i) delivered personally, (ii) if
transmitted by facsimile upon confirmation that such facsimile has been received or (iii) when sent
by registered or certified mail or by overnight courier service that obtains a receipt, addressed
as follows:

	 	 	 	 	 
	 

	 	If to Buyer, to:
	 	EH/TRANSEASTERN, LLC
	 

	 	 	 	c/o Tousa Homes LP
	 

	 	 	 	Suite 500-N
	 

	 	 	 	4000 Hollywood Blvd.
	 

	 	 	 	Hollywood, Florida 33021
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Technical Olympic USA, Inc.
	 

	 	 	 	Suite 500-N
	 

	 	 	 	4000 Hollywood Blvd.
	 

	 	 	 	Hollywood, Florida 33021
	 

	 	 	 	Attention: Tommy McAden, Executive Vice President
	 

	 	 	 	Fax No.: (954) 364-4010
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Technical Olympic USA, Inc.
	 

	 	 	 	Suite 500-N
	 

	 	 	 	4000 Hollywood Blvd.
	 

	 	 	 	Hollywood, Florida 33021
	 

	 	 	 	Attention: Patricia Petersen
	 

	 	 	 	Senior Vice President & General Counsel
	 

	 	 	 	Fax No.: (954) 364-4037
	 
	 	 	 	 
	 

	 	If to Sellers, to:
	 	Falcone Group, LLC
	 

	 	 	 	1951 N.W. 19th Street, Suite 200
	 

	 	 	 	Boca Raton, Florida 3343 l
	 

	 	 	 	Attention: Arthur Falcone, Chief Executive Officer
	 

	 	 	 	Fax No.: (561) 338-2971
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Nason Yeager Gerson White & Lioce, P.A.
	 

	 	 	 	Mellon United National Bank Tower
	 

	 	 	 	1645 Palm Beach Lakes Boulevard
	 

	 	 	 	Suite 1200
	 

	 	 	 	West Palm Beach, Florida 3340l
	 

	 	 	 	Attention: Gary Gerson
	 

	 	 	 	Fax No.: (561) 686-5442

or to such other address as such party may indicate by a notice delivered to the other party hereto.

     13.5 Successors and Assigns; No Third Party Beneficiaries.

          (a) The rights of a party under this Agreement shall not be assignable by such party hereto
prior to the Closing without the written consent of the other, except that the rights of Buyer
hereunder (including, without limitation, the rights to acquire certain Real Property pursuant to
the Option Documents) may be assigned prior to the Closing, without the consent of Sellers to one
or more of its Affiliates, provided that (i) the assignee shall assume in writing all of
Buyer’s obligations to Sellers hereunder, (ii) Buyer shall not be released from any of its
obligations hereunder by reason of such assignment and (iii) Sellers’ obligations under this
Agreement shall be subject to the delivery by such

84

 

assignee, on or prior to the Closing Date, of a
certificate signed on its behalf containing representations and warranties similar to those made by
Buyer in Article 6.

          (b) Following the Closing, this Agreement and the Ancillary Agreements executed in connection
herewith may not be assigned by either party hereto without the prior written consent of the other
party, which consent may be withheld for any reason whatsoever in the sole and absolute discretion
of the non-assigning party; provided, however, that Buyer may assign this Agreement and the Buyer
Ancillary Agreements to any of its Affiliates. Such assignment or transfer shall not relieve the
assignor of its obligations hereunder.

          (c) The terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties and their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to waive any rights, defenses or remedies available under this
Agreement, the Exhibits and Schedules at law or in equity or to confer upon any Person, other than
the parties hereto and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.

     13.6 Access to Records after Closing.

          (a) For a period of six (6) years after the Closing Date, each Seller and its representatives
shall have reasonable access to all of the books and records of Sellers transferred to Buyer
hereunder to the extent that such access may reasonably be required by such Seller in connection
with matters relating to or affected by the operations of Sellers prior to the Closing Date. Such
access shall be afforded by Buyer upon receipt of reasonable advance notice and during normal
business hours. Sellers shall be solely responsible for any costs or expenses incurred by them
pursuant to this Section 13.6. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall, prior to such disposition,
give Sellers a reasonable opportunity, at Sellers’ expense, to segregate and remove such books and
records as Sellers may select.

          (b) For a period of six (6) years after the Closing Date, Buyer and its representatives shall
have reasonable access to all of the books and records relating to the Purchased Assets and the
Contributed Assets, Sellers or the Business which Sellers or any of their Affiliates may retain
after the Closing Date. Such access shall be afforded by Sellers and their Affiliates upon receipt
of reasonable advance notice and during normal business hours. Buyer shall be solely responsible
for any costs and expenses incurred by it pursuant to this Section 13.6. If Sellers or any
of its Affiliates shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, Sellers shall, prior to such disposition, give Buyer a reasonable
opportunity, at Buyer’s expense, to segregate and remove such books and records as Buyer may
select.

          (c) Buyer shall provide Sellers with reasonable access to any Hired Employee to permit Sellers
to review and resolve any disputes relating to the Preliminary Closing Date Balance Sheet
and to assist in preparing or resolving any audit of Sellers’ tax returns for the years ended
on or prior to December 31, 2005.

     13.7 Entire Agreement; Amendments. This Agreement and the Exhibits and Schedules
referred to herein and the documents delivered pursuant hereto contain the entire understanding of
the parties hereto with regard to the subject matter contained herein or therein, and supersede all
prior agreements or understandings between or among any of the parties hereto, including the
Confidentiality Agreement. This Agreement shall not be amended, modified or supplemented except by
a written instrument signed by an authorized representative of each of the parties hereto.

85

 

     13.8 Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law, but in case any one
or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other provisions hereof,
unless such a construction would be unreasonable.

     13.9 Waivers. Any term or provision of this Agreement may be waived, or the time for
its performance may be extended, by the party or parties entitled to the benefit thereof. Any such
waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall not be construed
to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

     13.10 Expenses. Except as otherwise provided for herein, each party hereto shall pay
all costs and expenses incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and disbursements of its counsel and
accountants. All costs and expenses, if any, incurred by Sellers in connection with this Agreement
and the transactions contemplated hereby, including the fees, expenses and disbursements of counsel
and accountants to Sellers shall be paid by Sellers. Notwithstanding the foregoing and any other
provision of this Agreement, Buyer shall pay at the Closing any transfer Taxes, documentary stamps
and title insurance premiums; provided that the parties agree to cooperate to minimize costs
related to title insurance and transfer Taxes arising therefrom.

     13.11 Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original instrument, but all of which shall be
considered one and the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to Sellers and Buyer. Signatures of the
parties transmitted by facsimile shall be deemed to be original signatures for all purposes.

     13.12 Enforcement of Agreement. In the event of an action at law or in equity between
the parties hereto to enforce any of the provisions hereof, the non-prevailing party to such
litigation or Proceeding shall pay to the prevailing party all costs and expenses, including
reasonable attorneys’ fees, incurred therein by such prevailing party on trial and appeal as
adjudged by the court, and if such prevailing party or parties shall recover judgment in any such
action or Proceeding, such costs, expenses and attorneys’ fees may be included as part of such
judgment. In the event that a party prevails on some but not all of the issues, the costs and
expenses shall be apportioned based on the value of the issues on which it prevailed as compared to
the issues on which it did not prevail.

     13.13 Further Assurances; Power of Attorney. From time to time following the Closing,
Sellers shall, with reimbursement from Buyer for all reasonable costs incurred, execute and
deliver, or cause to be executed and delivered, to Buyer such other instruments of conveyance and
transfer as Buyer may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to Buyer the Purchased Assets and the Contributed Assets, and, in the case of
any licenses, certificates, approvals, authorizations, agreements, contracts, leases, easements and
other commitments (a) which cannot be transferred or assigned effectively without the consent of
third parties which consent has not been obtained prior to the Closing, to cooperate with Buyer at
its request in endeavoring to obtain such consent promptly, and if any such consent is
unobtainable, to use its commercially reasonable efforts to secure to Buyer the benefits thereof in
a manner mutually agreeable to both parties, or (b) which are

86

 

otherwise not transferable or
assignable, to use its commercially reasonable efforts jointly with Buyer to secure to Buyer the
benefits thereof in a manner mutually agreeable to both parties (including the exercise of the
rights of Sellers thereunder); provided, however that nothing herein shall relieve Sellers of their
obligations under Section 7.3. Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any license, certificate, approval,
authorization, agreement, contract, lease, easement or other commitment if an attempted assignment
thereof without the consent of a third party thereto would constitute a breach thereof.

     Each Seller hereby constitutes and appoints Buyer, with full power of substitution, as such
party’s true and lawful attorney in fact, authorizing Buyer to open mail addressed to such party,
to endorse checks and other instruments payable to such Seller, to execute, acknowledge, deliver
and file such deeds, transfers, conveyances, assignments, instruments, certificates and documents
and to take such other actions in the name, place and stead of such Seller as Buyer may find
necessary or appropriate to effectuate or carry out the intent of any provision of this Agreement;
provided, however said power of attorney shall not authorize Buyer to pay, perform
or discharge any liabilities of any Seller not included within the Assumed Liabilities or to
receive any monies or other things of value associated with or resulting from the Excluded Assets.
Not later than the fifteenth (15th) day after the end of each calendar month for the
twenty-four (24) months following the Closing Date, Buyer shall provide to Sellers copies of (x)
all mail addressed to Sellers which was opened by Buyer and any correspondence or other documents
evidencing action taken by Buyer with respect thereto and (y) all deeds, transfers, conveyances,
assignments, instruments, certificates and documents which were executed, acknowledged or delivered
by Buyer under the foregoing appointment, including all checks payable to any Seller which may have
been endorsed or negotiated by Buyer.

     13.14 Sellers’ Representative. Sellers hereby appoint Arthur J. Falcone as their
agent and attorney-in-fact to give and receive notices and communications on behalf of Sellers; to
perform the covenants and future acts required or
permitted under this Agreement or the Exhibits and Schedules hereto; to negotiate, consent,
settle, compromise or waive Buyer’s obligations under this Agreement; or to comply with orders of
courts with respect to such claims; and to take all actions necessary or appropriate in the
judgment of Arthur J. Falcone for the accomplishment of the foregoing. Arthur J. Falcone hereby
consents to such appointment (the “Sellers’ Representative”).

     13.15 Governing Law; Jurisdiction. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed
and interpreted in accordance with the laws of the State of Florida, without giving effect to
principles of conflicts of law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the state and federal courts of the State of Florida, County of Broward.
Under no circumstances will any Seller assert any claim or cause of action in any state or federal
court outside of the State of Florida. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED IN
THIS AGREEMENT, WHETHER NOT EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT
AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

     13.16 Time is of the Essence. With respect to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.

87

 

     13.17 Radon Gas. In accordance with the requirements of Florida Statutes Section
404.056(5), the following notice is hereby given:

“RADON GAS: Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding
radon testing may be obtained from your county public health unit.”

     13.18 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing and interpreting this Agreement.

     13.19 Legal Representation of the Parties. This Agreement was negotiated by the parties with the benefit of legal representation, and
any rule of construction or interpretation otherwise requiring this Agreement to be construed or
interpreted against any party shall not apply to any construction or interpretation hereof.

     13.20 Disclosure IF THE DISCLOSURE SUMMARY REQUIRED BY SECTION 720.401, FLORIDA
STATUTES, HAS NOT BEEN PROVIDED TO THE PROSPECTIVE PURCHASER BEFORE EXECUTING THIS AGREEMENT FOR
SALE, THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING TO SELLERS OR SELLERS’ AGENT OR
REPRESENTATIVE WRITTEN NOTICE OF THE BUYER’S INTENTION TO CANCEL WITHIN 3 DAYS AFTER RECEIPT OF THE
DISCLOSURE SUMMARY OR PRIOR TO CLOSING, WHICHEVER OCCURS FIRST. ANY PURPORTED WAIVER OF THIS
VOIDABILITY RIGHT HAS NO EFFECT. BUYER’S RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.

     13.21 Laguna Lakes

          (a) Buyer agrees and acknowledges that as part of the purchase of the Laguna Lakes project
which is a part of the Owned Real Property, Buyer is acquiring substantially completed condominium
units and condominium units that are not yet completed and are not yet certified complete as
required by the provisions of Chapter 718, Florida Statutes.

          (b) With respect to such condominium units, Buyer further agrees and acknowledges that it is
acquiring them in the ordinary course of business for resale to individual purchasers subject to
existing contracts to purchase such condominium units.

          (c) Buyer further agrees and acknowledges that Sellers have prepared the prospectuses and all
documents required to be delivered to such purchasers pursuant to Chapter 718, Florida Statutes,
and that Buyer has been furnished copies of such condominium documents.

          (d) Buyer further agrees and acknowledges that no portion of the Deposit to be delivered
pursuant to this Agreement is attributable to the condominium units and the escrow requirements of
Chapter 718, Florida Statutes do not apply to this transaction.

          (e) Buyer further agrees and acknowledges that Buyer’s rescission rights only pertain to the
condominium units within the Laguna Lakes project.

88

 

THIS AGREEMENT IS VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S INTENTION TO CANCEL
WITHIN 15 DAYS AFTER THE DATE OF EXECUTION OF THIS AGREEMENT BY BUYER, AND RECEIPT BY BUYER OF ALL
OF THE ITEMS REQUIRED TO BE DELIVERED TO BUYER BY THE DEVELOPER UNDER SECTION 718.503, FLORIDA
STATUTES. THIS AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF BUYER’S
INTENTION TO CANCEL WITHIN 15 DAYS AFTER THE DATE OF RECEIPT FROM THE DEVELOPER OF ANY AMENDMENT
WHICH MATERIALLY ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS ADVERSE TO BUYER. ANY
PURPORTED WAIVER OF THESE VOIDABILITY RIGHTS SHALL BE OF NO EFFECT. BUYER MAY EXTEND THE TIME FOR
CLOSING FOR A PERIOD OF NOT MORE THAN 15 DAYS AFTER BUYER HAS RECEIVED ALL OF THE
ITEMS REQUIRED. BUYER’S RIGHT TO VOID THIS AGREEMENT SHALL TERMINATE AT CLOSING.

89

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day
and year first above written.

	 	 	 	 	 
	 	 	BUYER
	 
	 	 	 	 
	 	 	EH/TRANSEASTERN, LLC, a Delaware limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Tommy McAden
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	SELLERS
	 
	 	 	 	 
	 	 	TRANSEASTERN PROPERTIES, INC., a Florida
corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	LIVE OAK DEVELOPMENT I, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	LIVE OAK DEVELOPMENT II, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

90

 

	 	 	 	 	 
	 	 	SERVICES MANAGEMENT, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TEP OF TRADITION, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TEPSR7, LLC, a Florida limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN ANTHONY GROVES, INC., a Florida
corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN BAYSHORE, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN BRONSON, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

91

 

	 	 	 	 	 
	 	 	TRANSEASTERN CORAL LAKES, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN CYPRESS LANDING, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN DANIEL’S LANDING, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN HAMMOCKS, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN HELLER, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

92

 

	 	 	 	 	 
	 	 	TRANSEASTERN HOMES, INC., a Florida corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN INDEPENDENCE, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN JONATHAN’S BAY, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN KENDALL POINTE, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN LAGUNA LAKES, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

93

 

	 	 	 	 	 
	 	 	TRANSEASTERN LEGACY PARK, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN OAK CREEK, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN OAK CREEK II, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN OLYMPIA POINTE, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN SAVANNAH, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

94

 

	 	 	 	 	 
	 	 	TRANSEASTERN TRADITION, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN VERSAILLES, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN VICTORIA DUVAL, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN VILLA CAPRI AT METROWEST, LLC, a

Florida limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN VIZCAYA, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

95

 

	 	 	 	 	 
	 	 	TRANSEASTERN WESTON RESERVE, LLC, a Florida

limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	TRANSEASTERN YOUNG PINES, LLC, a Florida limited

liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Solely with respect to Section 2.1 and
12.4:
	 
	 	 	 	 
	 	 	FALCONE/RITCHIE, LLC, a Florida limited liability

company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Solely with respect to Sections 5.10(dd),
8.1, and 8.11:
	 
	 	 	 	 
	 	 	ARTHUR J. FALCONE
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Falcone
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Solely with respect to Sections 5.10(dd) and
8.1:
	 
	 	 	 	 
	 	 	EDWARD W. FALCONE
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Edward W. Falcone
	 

	 	 	 	 

96

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