Document:

exv10w1

 

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

Dated as of September 25, 2003

By and Among

MERITAGE CORPORATION

as Issuer,

the GUARANTORS named herein

and

UBS SECURITIES LLC,

DEUTSCHE BANK SECURITIES INC.,

BANC ONE CAPITAL MARKETS, INC. and

FLEET SECURITIES, INC.

as Initial Purchasers

9 3/4% Senior Notes due 2011

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Page
	 	 	 	 	 	 	 	 	 	 	

	Section 1.	 	Definitions
	 	 	 	 	1	 
	Section 2.	 	Exchange Offer
	 	 	 	 	4	 
	Section 3.	 	Shelf Registration Statement
	 	 	 	 	7	 
	Section 4.	 	Liquidated Damages
	 	 	 	 	9	 
	Section 5.	 	Registration Procedures
	 	 	 	 	10	 
	Section 6.	 	Registration Expenses
	 	 	 	 	17	 
	Section 7.	 	Indemnification
	 	 	 	 	18	 
	Section 8.	 	Rules 144 and 144A
	 	 	 	 	21	 
	Section 9.	 	Underwritten Registrations
	 	 	 	 	21	 
	Section 10.	 	Miscellaneous
	 	 	 	 	22	 
	 	 	 	 	(a)
	 	No Inconsistent Agreements	 	 	22	 
	 	 	 	 	(b)
	 	Adjustments Affecting Registrable Notes	 	 	22	 
	 	 	 	 	(c)
	 	Amendments and Waivers	 	 	22	 
	 	 	 	 	(d)
	 	Notices	 	 	22	 
	 	 	 	 	(e)
	 	Guarantors	 	 	24	 
	 	 	 	 	(f)
	 	Successors and Assigns	 	 	24	 
	 	 	 	 	(g)
	 	Counterparts	 	 	24	 
	 	 	 	 	(h)
	 	Headings	 	 	24	 
	 	 	 	 	(i)
	 	Governing Law	 	 	24	 
	 	 	 	 	(j)
	 	Severability	 	 	24	 
	 	 	 	 	(k)
	 	Securities Held by the Company or Its Affiliates	 	 	24	 
	 	 	 	 	(l)
	 	Third-Party Beneficiaries	 	 	24	 
	 	 	 	 	(m)
	 	Attorneys’ Fees	 	 	24	 
	 	 	 	 	(n)
	 	Entire Agreement	 	 	25	 
	SIGNATURES	 	 	 	 	 	 	S-1	 

-i-

 

REGISTRATION RIGHTS AGREEMENT

               This Registration Rights Agreement (this “Agreement”) is dated as of
September 25, 2003, by and among Meritage Corporation, a Maryland corporation
(the “Company”), and each of the Guarantors (as defined herein) (the Company
and the Guarantors are referred to collectively herein as the “Issuers”), on
the one hand, and UBS Securities LLC, Deutsche Bank Securities Inc., Banc One
Capital Markets, Inc. and Fleet Securities, Inc. (the “Initial Purchasers”) on
the other hand.

               This Agreement is entered into in connection with the Purchase Agreement,
dated as of September 18, 2003, by and among the Issuers and the Initial
Purchasers, as amended by Amendment No. 1 to the Purchase Agreement, dated as
of September 24, 2003, (the “Purchase Agreement”), relating to the offering of
$75,000,000 aggregate principal amount of the Company’s 9 3/4% Senior Notes
due 2011 (including the guarantees thereof by the Guarantors, the “Notes”).
The execution and delivery of this Agreement is a condition to the Initial
Purchasers’ obligation to purchase the Notes under the Purchase Agreement.

               The parties hereby agree as follows:

     Section 1.     Definitions

               As used in this Agreement, the following terms shall have the following
meanings:

               “action” shall have the meaning set forth in Section 7(c) hereof.

               “Advice” shall have the meaning set forth in Section 5 hereof.

               “Agreement” shall have the meaning set forth in the first introductory
paragraph hereto.

               “Applicable Period” shall have the meaning set forth in Section 2(b)
hereof.

               “Board of Directors” shall have the meaning set forth in Section 5 hereof.

               “Business Day” shall mean a day that is not a Legal Holiday.

               “Company” shall have the meaning set forth in the introductory paragraph
hereto and shall also include the Company’s permitted successors and assigns.

               “Commission” shall mean the Securities and Exchange Commission.

               “day” shall mean a calendar day.

               “Delay Period” shall have the meaning set forth in Section 5 hereof.

               “Effectiveness Period” shall have the meaning set forth in the second
paragraph of Section 3(a) hereof.

               “Event Date” shall have the meaning set forth in Section 4(b) hereof.

 

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               “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.

               “Exchange Notes” shall have the meaning set forth in Section 2(a) hereof.

               “Exchange Offer” shall have the meaning set forth in Section 2(a) hereof.

               “Exchange Offer Registration Statement” shall have the meaning set forth
in Section 2(a) hereof.

               “Guarantors” means each of the Persons executing this Agreement (as set
forth on Schedule A) on the date hereof and each Person who executes and
delivers a counterpart of this Agreement hereafter pursuant to Section 10(e)
hereof.

               “Holder” shall mean any holder of a Registrable Note or Registrable Notes.

               “Indenture” shall mean the Indenture, dated as of May 30, 2001, by and
among the Issuers and Wells Fargo Bank, National Association, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.

               “Initial Purchasers” shall have the meaning set forth in the first
introductory paragraph hereof.

               “Initial Shelf Registration Statement” shall have the meaning set forth in
Section 3(a) hereof.

               “Inspectors” shall have the meaning set forth in Section 5(n) hereof.

               “Issue Date” shall mean September 25, 2003, the date of original issuance
of the Notes.

               “Issuers” shall have the meaning set forth in the introductory paragraph
hereto.

               “Legal Holiday” shall mean a Saturday, a Sunday or a day on which banking
institutions in New York, New York are required by law, regulation or executive
order to remain closed.

               “Liquidated Damages” shall have the meaning set forth in Section 4(a)
hereof.

               “Losses” shall have the meaning set forth in Section 7(a) hereof.

               “NASD” shall have the meaning set forth in Section 5(s) hereof.

               “Notes” shall have the meaning set forth in the second introductory
paragraph hereto.

               “Participant” shall have the meaning set forth in Section 7(a) hereof.

               “Participating Broker-Dealer” shall have the meaning set forth in Section
2(b) hereof.

 

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               “Person” shall mean an individual, corporation, partnership, joint venture
association, joint stock company, trust, unincorporated limited liability
company, government or any agency or political subdivision thereof or any other
entity.

               “Private Exchange” shall have the meaning set forth in Section 2(b)
hereof.

               “Private Exchange Notes” shall have the meaning set forth in Section 2(b)
hereof.

               “Prospectus” shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

               “Purchase Agreement” shall have the meaning set forth in the second
introductory paragraph hereof.

               “Records” shall have the meaning set forth in Section 5(n) hereof.

               “Registrable Notes” shall mean each Note upon its original issuance and at
all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, in each case until (i) a Registration Statement (other
than, with respect only to any Exchange Note as to which Section 2(c)(iv)
hereof is applicable, the Exchange Offer Registration Statement) covering such
Note, Exchange Note or Private Exchange Note has been declared effective by the
Commission and such Note, Exchange Note or such Private Exchange Note, as the
case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes that may be resold
without restriction under state and federal securities laws, (iii) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture or (iv) such Note, Exchange Note or
Private Exchange Note has been sold in compliance with Rule 144 or is salable
pursuant to Rule 144(k).

               “Registration Default” shall have the meaning set forth in Section 4(a)
hereof.

               “Registration Statement” shall mean any appropriate registration statement
of the Issuers covering any of the Registrable Notes filed with the Commission
under the Securities Act, and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

               “Requesting Participating Broker-Dealer” shall have the meaning set forth
in Section 2(b) hereof.

 

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               “Rule 144” shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.

               “Rule 144A” shall mean Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the Commission.

               “Rule 415” shall mean Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.

               “Securities Act” shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

               “Shelf Filing Event” shall have the meaning set forth in Section 2(c)
hereof.

               “Shelf Registration Statement” shall have the meaning set forth in Section
3(b) hereof.

               “Subsequent Shelf Registration Statement” shall have the meaning set forth
in Section 3(b) hereof.

               “TIA” shall mean the Trust Indenture Act of 1939, as amended.

               “Trustee” shall mean the trustee under the Indenture and the trustee (if
any) under any indenture governing the Exchange Notes and Private Exchange
Notes.

               “underwritten registration or underwritten offering” shall mean a
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

     Section 2.     Exchange Offer

               (a)     The Issuers shall (i) file a Registration Statement (the “Exchange
Offer Registration Statement”) within 75 days after the Issue Date with the
Commission on an appropriate registration form with respect to a registered
offer (the “Exchange Offer”) to exchange any and all of the Registrable Notes
for a like aggregate principal amount of notes (including the guarantees with
respect thereto, the “Exchange Notes”) that are identical in all material
respects to the Notes (except that the Exchange Notes bear no restrictive
legend thereon and shall not contain terms with respect to Liquidated Damages
upon a Registration Default), (ii) use their respective reasonable best efforts
to cause the Exchange Offer Registration Statement to be declared effective
under the Securities Act within 150 days after the Issue Date and (iii) use
their respective reasonable best efforts to complete the Exchange Offer within
180 days after the Issue Date; provided that the Exchange Offer may not be
completed on or prior to December 1, 2003. The Exchange Offer shall be deemed
completed or consummated for purposes of this Agreement upon delivery by the
Company to the Trustee under the Indenture of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of Notes tendered
(and not withdrawn) by Holders thereof pursuant to the Exchange Offer. Upon
the Exchange Offer Registration Statement being declared

 

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effective by the Commission, the Company will offer the Exchange Notes in
exchange for surrender of the Notes. The Company shall keep the Exchange Offer
open for not less than 20 Business Days (or longer if required by applicable
law to complete the Exchange Offer) after the date notice of the Exchange Offer
is mailed to Holders.

               Each Holder that participates in the Exchange Offer will be required to
represent to the Company in writing (which may be contained in the applicable
letter of transmittal) that (i) any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes in violation of the
Securities Act, (iii) it is not an affiliate (as defined in Rule 405 under the
Securities Act) of any Issuer or, if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable, (iv) if such Holder is not a broker-dealer, it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes,
(v) if such Holder is a broker-dealer that will receive Exchange Notes for its
own account in exchange for Notes that were acquired as a result of
market-making or other trading activities, it will deliver a prospectus in
connection with any resale of such Exchange Notes and (vi) the Holder is not
acting on behalf of any Persons who could not truthfully make the foregoing
representations.

               (b)     The Company and the Initial Purchasers acknowledge that the staff of
the Commission has taken the position that any broker-dealer that elects to
exchange Notes that were acquired by such broker-dealer for its own account as
a result of market-making or other trading activities for Exchange Notes in the
Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be an
“underwriter” within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).

               The Company and the Initial Purchasers also acknowledge that the staff of
the Commission has taken the position that if the Prospectus contained in the
Exchange Offer Registration Statement includes a plan of distribution
containing a statement to the above effect and the means by which Participating
Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such
Prospectus may be delivered by Participating Broker-Dealers to satisfy their
prospectus delivery obligations under the Securities Act in connection with
resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.

               In light of the foregoing, if requested by a Participating Broker-Dealer
(a “Requesting Participating Broker-Dealer”), the Issuers agree to use their
reasonable best efforts to keep the Exchange Offer Registration Statement
continuously effective for a period of up to 180 days after the date on which
the Exchange Offer Registration Statement is declared effective, or such longer
period if extended pursuant to the last paragraph of Section 5 hereof (such
period, the “Applicable Period”), or such earlier date as all Requesting
Participating Broker-Dealers shall have notified the Company in writing that
such Requesting Participating Broker-Dealers have resold all Exchange Notes
acquired in the Exchange Offer. The Company shall include a plan of
distribution in such Exchange Offer Registration Statement that meets the
requirements set forth in the preceding paragraph.

               If, prior to consummation of the Exchange Offer, any Holder holds any
Notes acquired by it that have, or that are reasonably likely to be determined
to have, the status of an unsold allotment in

 

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an initial distribution, or if any Holder is not entitled to participate
in the Exchange Offer, the Company upon the request of any such Holder shall
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to any such Holder, in exchange (the “Private Exchange”) for
such Notes held by any such Holder, a like principal amount of notes (the
“Private Exchange Notes”) of the Company that are identical in all material
respects to the Exchange Notes, except for the placement of a restrictive
legend on such Private Exchange Notes. The Private Exchange Notes shall be
issued pursuant to the same indenture as the Exchange Notes and bear the same
CUSIP number as the Exchange Notes.

               In connection with the Exchange Offer, the Company shall:

		
	 	     (1)     mail or cause to be mailed to each Holder entitled to
participate in the Exchange Offer a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
	 
	 	     (2)     utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
	 
	 	     (3)     permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last Business Day on which
the Exchange Offer shall remain open; and
	 
	 	     (4)     otherwise comply in all material respects with all applicable
laws, rules and regulations.

               As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Company shall:

		
	 	     (1)     accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer and the Private
Exchange, if any;
	 
	 	     (2)     deliver or cause to be delivered to the Trustee for cancellation
all Registrable Notes so accepted for exchange; and
	 
	 	     (3)     cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case
may be, equal in principal amount to the Notes of such Holder so accepted
for exchange.

               The Exchange Offer and the Private Exchange shall not be subject to any
conditions, other than that (i) the Exchange Offer or Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation
of the staff of the Commission, (ii) no action or proceeding shall have been
instituted or threatened in any court or by any governmental agency which might
materially impair the ability of the Issuers to proceed with the Exchange Offer
or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Issuers that
would impair their ability to so proceed and (iii) all governmental approvals
shall have been obtained, which approvals the Issuers deem necessary for the
consummation of the Exchange Offer or Private Exchange.

 

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               In the event that the Issuers are unable to consummate the Exchange Offer
or the Private Exchange due to any event listed in clauses (i) through (iii)
above, the Issuers shall not be deemed to have breached any covenant under this
Section 2.

               The Exchange Notes and the Private Exchange Notes shall be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to
the Indenture (in either case, with such changes as are necessary to comply
with any requirements of the Commission to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that the Exchange Notes shall not be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such other
indenture shall provide that when a vote or consent of the Holders is required,
the Exchange Notes, the Private Exchange Notes and the Notes shall vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes will have the right to vote or
consent as a separate class on any matter.

               (c)     In the event that (i) any changes in law or the applicable
interpretations of the staff of the Commission do not permit the Issuers to
effect the Exchange Offer, (ii) for any reason the Exchange Offer is not
consummated within 180 days of the Issue Date, (iii) any Holder notifies the
Company that it is prohibited by law or the applicable interpretations of the
staff of the Commission from participating in the Exchange Offer, (iv) in the
case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such holder as an affiliate of any Issuer), (v) the Initial
Purchasers so request with respect to Notes that have, or that are reasonably
likely to be determined to have, the status of unsold allotments in an initial
distribution or (vi) any Holder of Private Exchange Notes so requests (each
such event referred to in clauses (i) through (vi) of this sentence, a “Shelf
Filing Event”), then the Issuers shall file a Shelf Registration Statement
pursuant to Section 3 hereof.

     Section 3.     Shelf Registration Statement

               If at any time a Shelf Filing Event shall occur, then:

		
	 	     (a)     Shelf Registration Statement. The Issuers shall file with the
Commission a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable
Notes not exchanged in the Exchange Offer, Private Exchange Notes and
Exchange Notes as to which Section 2(c)(iv) is applicable, which may be
an amendment to the Exchange Offer Registration Statement (the “Initial
Shelf Registration Statement”). The Issuers shall file with the
Commission the Initial Shelf Registration Statement as promptly as
practicable and in any event on or prior to 45 days after the Company
determines or is notified that a Shelf Filing Event has occurred. The
Initial Shelf Registration Statement shall be on Form S-3 or another
appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers
shall not permit any securities other than the Registrable Notes to be
included in the Initial Shelf Registration Statement or in any Subsequent
Shelf Registration Statement (as defined below).
	 
	 	     The Issuers shall use their respective reasonable best efforts (x)
to cause the Initial Shelf Registration Statement to be declared
effective under the Securities Act on or prior to the 90th

 

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	 	day after the Company determines or is notified that such a Shelf
Filing Event has occurred; provided that the Shelf Registration Statement
shall not be declared effective on or prior to December 1, 2003 and (y)
to keep the Initial Shelf Registration Statement continuously effective
under the Securities Act for the period ending on the date which is two
years from the date it becomes effective (or one year if the Initial
Shelf Registration Statement is filed at the request of an Initial
Purchaser), subject to extension pursuant to the penultimate paragraph of
Section 5 hereof (the “Effectiveness Period”), or such shorter period
ending when (i) all Registrable Notes covered by the Initial Shelf
Registration Statement have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration Statement or cease to be
outstanding, (ii) all Registrable Notes are eligible to be sold to the
public pursuant to Rule 144(k) under the Securities Act or (iii) a
Subsequent Shelf Registration Statement covering all of the Registrable
Notes covered by and not sold under the Initial Shelf Registration
Statement or an earlier Subsequent Shelf Registration Statement has been
declared effective under the Securities Act; provided, however, that (i)
the Effectiveness Period in respect of the Initial Shelf Registration
Statement shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174
under the Securities Act and as otherwise provided herein and (ii) the
Company may suspend the effectiveness of the Initial Shelf Registration
Statement by written notice to the Holders solely as a result of the
filing of a post-effective amendment to the Initial Shelf Registration
Statement where such post-effective amendment is not yet effective and
needs to be declared effective to permit holders to use the related
Prospectus.
	 
	 	     (b)     Subsequent Shelf Registration Statements. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement
ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the
securities registered thereunder), the Issuers shall use their respective
reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall as soon as
practicable after such cessation amend the Initial Shelf Registration
Statement or such Subsequent Shelf Registration Statement, as the case
may be, in a manner to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional “shelf” Registration
Statement pursuant to Rule 415 covering all of the Registrable Notes
covered by and not sold under the Initial Shelf Registration Statement or
such earlier Subsequent Shelf Registration Statement (each, a “Subsequent
Shelf Registration Statement”). If a Subsequent Shelf Registration
Statement is filed, the Issuers shall use their respective reasonable
best efforts to cause the Subsequent Shelf Registration Statement to be
declared effective under the Securities Act as soon as practicable after
such filing and to keep such Subsequent Shelf Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration Statement and any Subsequent Shelf
Registration Statement was previously continuously effective. As used
herein, the term “Shelf Registration Statement” means the Initial Shelf
Registration Statement and any Subsequent Shelf Registration Statement.
	 
	 	     (c)     Supplements and Amendments. The Issuers agree to supplement or
make amendments to the Shelf Registration Statement as and when required
by the rules, regulations or instructions applicable to the registration
form used for such Shelf Registration Statement or by the Securities Act
or rules and regulations thereunder for shelf registration, or if
reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement or
by any underwriter of such Registrable Notes; provided,

 

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	 	however, that the Issuers shall not be required to supplement or
amend any Shelf Registration Statement upon the request of a Holder or
any underwriter if such requested supplement or amendment would, in the
good faith judgment of the Company (based on advice of counsel), violate
the Securities Act, the Exchange Act or the rules and regulations
promulgated thereunder.

     Section 4.     Liquidated Damages

               (a)     Issuers and the Initial Purchasers agree that the Holders will suffer
damages if the Issuers fail to fulfill their obligations under Section 2 or
Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Issuers agree that if:

		
	 	     (i)     the Exchange Offer Registration Statement is not filed with the
Commission on or prior to the 75th day following the Issue Date, or, if
that day is not a Business Day, then the next day that is a Business Day,
	 
	 	     (ii)     the Exchange Offer Registration Statement is not declared
effective on or prior to the 150th day following the Issue Date, or, if
that day is not a Business Day, then the next day that is a Business Day,
	 
	 	     (iii)     the Exchange Offer is not completed on or prior to the 180th
day following the Issue Date, or, if that day is not a Business Day, then
the next day that is a Business Day, or
	 
	 	     (iv)     the Shelf Registration Statement is required to be filed but is
not filed or declared effective within the time periods set forth herein
or is declared effective but thereafter ceases to be effective or usable
prior to the expiration of the Effectiveness Period, except if the Shelf
Registration Statement ceases to be effective or usable as specifically
permitted by the penultimate paragraph of Section 5 hereof

(each such event referred to in clauses (i) through (iv) a “Registration
Default”), liquidated damages in the form of additional cash interest
(“Liquidated Damages”) will accrue on the affected Notes and the affected
Exchange Notes, as applicable. The rate of Liquidated Damages will be 0.25%
per annum for the first 90-day period (or portion thereof) immediately
following the occurrence of a Registration Default, increasing by an additional
0.25% per annum with respect to each subsequent 90-day period (or portion
thereof) up to a maximum amount of additional interest of 1.00% per annum, from
and including the date on which any such Registration Default shall occur to,
but excluding, the earlier of (1) the date on which all Registration Defaults
have been cured or (2) the date on which all the Notes and Exchange Notes
otherwise become freely transferable by Holders other than affiliates of the
Issuers without further registration under the Securities Act.

               Notwithstanding the foregoing, (1) the amount of Liquidated Damages
payable shall not increase because more than one Registration Default has
occurred and is pending, (2) a Holder of Notes or Exchange Notes who is not
entitled to the benefits of the Shelf Registration Statement (i.e., such Holder
has not elected to include information) shall not be entitled to Liquidated
Damages with respect to a Registration Default that pertains to the Shelf
Registration Statement and (3) no holder of Notes constituting an unsold
allotment from the original sale of the Notes by the Company to the Initial
Purchasers shall be entitled to Liquidated Damages by reason of a Registration
Default that pertains to an Exchange Offer.

 

 

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               Notwithstanding anything to the contrary set forth herein, with respect to
any Registration Default, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the
case of clause (i) or (iv) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of clause (ii) or (iv) above, (3) upon completion of
the Exchange Offer, in the case of clause (iii) above, or (4) upon the filing
of a post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable, the applicable Registration Default shall be deemed
to have been cured.

               (b) The Company shall notify the Trustee within one Business Day after
each and every date on which an event occurs in respect of which Liquidated
Damages are required to be paid (an “Event Date”). Any amounts of Liquidated
Damages due pursuant to this Section 4 will be payable in addition to any other
interest payable from time to time with respect to the Registrable Notes in
cash semi-annually on the interest payment dates specified in the Indenture (to
the holders of record as specified in the Indenture), commencing with the first
such interest payment date occurring after any such Liquidated Damages commence
to accrue. The amount of Liquidated Damages will be determined in a manner
consistent with the calculation of interest under the Indenture.

     Section 5. Registration Procedures

               In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder, the
Issuers shall:

		
	 	     (a) Prepare and file with the Commission the Registration Statement
or Registration Statements prescribed by Section 2 or 3 hereof, and use
their reasonable best efforts to cause each such Registration Statement
to become effective and remain effective as provided herein; provided,
however, that, if (1) such filing is pursuant to Section 3 hereof, or (2)
a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period relating thereto, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford the Holders
of the Registrable Notes covered by such Registration Statement or each
such Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, a reasonable opportunity to review
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to
be filed (in each case at least five Business Days prior to such filing).
The Issuers shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto if the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriters, if any, shall
reasonably object within five Business Days after receipt thereof.
	 
	 	     (b) Prepare and file with the Commission such amendments and
post-effective amendments to each Initial Shelf Registration Statement or
Exchange Offer Registration State-

 

 

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	 	ment, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the
Securities Act; and comply with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale
of any securities being sold by a Participating Broker-Dealer covered by
any such Prospectus, in each case, in accordance with the intended
methods of distribution set forth in such Registration Statement or
Prospectus, as so amended.
	 
	 	     (c) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period relating
thereto from whom the Issuers have received written notice that it will
be a Participating Broker-Dealer in the Exchange Offer, notify the
selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, as promptly as possible, and, if requested by any
such Person, confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a Registration Statement or any post-effective amendment,
when the same has become effective under the Securities Act (including
in such notice a written statement that any Holder may, upon request in
writing, obtain, at the sole expense of the Company, one conformed copy
of such Registration Statement or post-effective amendment including
financial statements and schedules, documents incorporated or deemed to
be incorporated by reference and exhibits), (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or the initiation of any proceedings for
that purpose, (iii) if at any time when a Prospectus is required by the
Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating
Broker-Dealers the representations and warranties of the Issuers
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(m) hereof cease to be true and correct in all
material respects, (iv) of the receipt by any of the Issuers of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known to any Issuer that makes any
statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in or amendments or supplements to such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and (vi) of the Company’s determination that a post-effective amendment
to a Registration Statement would be appropriate.

 

 

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	 	     (d) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, use their
reasonable best efforts to prevent the issuance of any order suspending
the effectiveness of a Registration Statement or of any order preventing
or suspending the use of a Prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable Notes or the
Exchange Notes, as the case may be, for sale in any jurisdiction, and, if
any such order is issued, to use their reasonable best efforts to obtain
the withdrawal of any such order at the earliest practicable moment.

		
	 	     (e) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period and if
requested by the managing underwriter or underwriters (if any), the
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement or any Participating
Broker-Dealer, as the case may be, (i) as promptly as practicable
incorporate in such Registration Statement or Prospectus a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters (if any), such Holders or any Participating
Broker-Dealer, as the case may be (based upon advice of counsel),
reasonably request as necessary to be included therein and (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the
Issuers shall not be required to take any action hereunder that would, in
the good faith judgment of the Company (based on advice of counsel),
violate applicable laws.
	 
	 	     (f) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, furnish to
each selling Holder of Registrable Notes and a single counsel to such
Holders, or each such Participating Broker-Dealer and their counsel, as
the case may be, who so requests and each managing underwriter, if any,
and a single counsel for such underwriters, at the sole expense of the
Company, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated
or deemed to be incorporated therein by reference and any exhibits.
	 
	 	     (g) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, deliver to
each selling Holder of Registrable Notes and a single counsel to such
Holders, or each such Participating Broker-Dealer and their counsel, as
the case may be, and the underwriters, if any, and a single counsel for
such underwriters, at the sole expense of the Company, as many copies of
the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request;
and, subject to the last paragraph of this Section 5, the Issuers hereby
consent to the use of such

 

 

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	 	Prospectus and each amendment or supplement thereto (provided the
manner of such use complies with any limitations resulting from any
applicable laws, including state securities or “Blue Sky” laws, and
subject to the provisions of this Agreement) by each of the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as
the case may be, and the underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes
or the sale by Participating Broker-Dealers of the Exchange Notes covered
by or pursuant to such Prospectus and any amendment or supplement
thereto.
	 
	 	     (h) Prior to any public offering of Registrable Notes or Exchange
Notes or any delivery of a Prospectus contained in the Exchange Offer
Registration Statement by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, use their reasonable
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as
the case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Notes or Exchange Notes, as the case may be, for offer
and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters reasonably
request in writing; provided, however, that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Company agrees to cause the
Company’s counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 5(h), keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of such Exchange Notes or Registrable Notes covered by the
applicable Registration Statement; provided, however, that no Issuer
shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction
where it is not then so subject or (C) subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction where it is
not then so subject.
	 
	 	     (i) If a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends and
shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or underwriters,
if any, or selling Holders may reasonably request at least two Business
Days prior to any sale of such Registrable Notes or Exchange Notes.
	 
	 	     (j) Use their reasonable best efforts to cause the Registrable Notes
or Exchange Notes covered by any Registration Statement to be registered
with or approved by such other governmental agencies or authorities as
may be reasonably necessary to enable the seller or sellers thereof or
the underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes or Exchange Notes, except as may be required
solely as a consequence of the nature of such selling Holder’s business,
in which case the Company will cooperate in all reasonable respects with
the filing of such Registration Statement and the granting of such
approvals.

 

 

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	 	     (k) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by Section 5(c)(v) or 5(c)(vi)
hereof, as promptly as practicable prepare and (subject to Section 5(a)
and the penultimate paragraph of this Section 5) file with the
Commission, at the sole expense of the Company, a supplement or
post-effective amendment to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes
being sold thereunder or to the purchasers of the Exchange Notes to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
	 
	 	     (l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
	 
	 	     (m) In connection with any underwritten offering of Registrable
Notes pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes in form reasonably satisfactory to the
Issuers and take all such other actions as are reasonably requested by
the managing underwriter or underwriters, if any, in order to expedite or
facilitate the registration or the disposition of such Registrable Notes
and, in such connection, (i) make such representations and warranties to,
and covenants with, the underwriters with respect to the business of the
Issuers and their subsidiaries (including any acquired business,
properties or entity, if applicable) and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of debt securities
similar to the Notes, and confirm the same in writing if and when
requested in form reasonably satisfactory to the Issuers; (ii) upon the
request of any underwriter, use their reasonable best efforts to obtain
the written opinions of counsel to the Company and written updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by the managing underwriter or underwriters; (iii) upon the
request of any underwriter, use their reasonable best efforts to obtain
“cold comfort” letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary
form and covering matters of the type customarily covered in “cold
comfort” letters in connection with underwritten offerings of debt
securities similar to the Notes, and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered

 

 

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	 	into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority
in aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or
agents, if any) with respect to all parties to be indemnified pursuant to
said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
	 
	 	     (n) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable Notes
being sold or each such Participating Broker-Dealer, as the case may be,
any underwriter participating in any such disposition of Registrable
Notes, if any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the “Inspectors”), at the
offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
instruments of the Company and its subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the appropriate
officers, directors and employees of the Company and its subsidiaries to
supply all information reasonably requested by any such Inspector in
connection with such Registration Statement and Prospectus. Each
Inspector shall agree in writing that it will keep the Records
confidential and not disclose any Records that the Company determines, in
good faith, to be confidential and that it notifies the Inspectors in
writing are confidential unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
Registration Statement or Prospectus, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is necessary or
advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector
and arising out of, based upon, relating to, or involving this Agreement
or the Purchase Agreement, or any transactions contemplated hereby or
thereby or arising hereunder or thereunder, or (iv) the information in
such Records has been made generally available to the public other than
through an act of such Inspector in violation of this Section 5(n);
provided, however, that, if practicable, prior notice shall be provided
as soon as practicable to the Issuers of the potential disclosure of any
information by such Inspector pursuant to clause (ii) of this sentence to
permit the Issuers to obtain a protective order or to take other
appropriate action to prevent the disclosure of such information and that
such Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to the
extent such action is otherwise not inconsistent with, an impairment of
or in derogation of the rights and interests of the Holder or any
Inspector.
	 
	 	     (o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(b) hereof to be qualified under the
TIA not later than the effective date of the Exchange Offer or the first
Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Registrable Notes or Exchange Notes, as
applicable, to effect such changes to such indenture as may be required
for such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such

 

 

-16-

		
	 	changes, and all other forms and documents required to be filed with
the Commission to enable such indenture to be so qualified in a timely
manner.
	 
	 	     (p) Comply with all applicable rules and regulations of the
Commission and make generally available to the Company’s securityholders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) (i) commencing at the end of any fiscal quarter
in which Registrable Notes or Exchange Notes are sold to underwriters in
a firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement.
	 
	 	     (q) Upon the request of a Holder, upon consummation of the Exchange
Offer or a Private Exchange, use their reasonable best efforts to obtain
an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of
all Holders of Registrable Notes participating in the Exchange Offer or
the Private Exchange, as the case may be, that the Exchange Notes or
Private Exchange Notes, as the case may be, and the related indenture
constitute legal, valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with its respective terms,
subject to customary exceptions and qualifications.
	 
	 	     (r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company (or to such other Person as directed by the Company) in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being cancelled in exchange for the Exchange Notes
or the Private Exchange Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
	 
	 	     (s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the “NASD”).
	 
	 	     (t) Use their reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Exchange Notes
and/or Registrable Notes covered by a Registration Statement contemplated
hereby.

               The Company may require each seller of Registrable Notes or Exchange Notes
as to which any registration is being effected to furnish to the Issuers such
information regarding such seller and the distribution of such Registrable
Notes or Exchange Notes as the Company may, from time to time, reasonably
request. The Issuers may exclude from such registration the Registrable Notes
or Exchange Notes of any seller so long as such seller fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make any information previously furnished to the Company by such
seller not materially misleading.

 

 

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               If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (i) the insertion therein of language, in form
and substance reasonably satisfactory to such Holder, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the securities
covered thereby and that such holding does not imply that such Holder will
assist in meeting any future financial requirements of the Company, or (ii) in
the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force,
the deletion of the reference to such Holder in any amendment or supplement to
the Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.

               Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes that, upon
actual receipt of any notice from the Company (x) of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi)
hereof, or (y) that the Board of Directors of the Company (the “Board of
Directors”) has resolved that the Company has a bona fide business purpose for
doing so, then the Company may delay the filing or the effectiveness of the
Exchange Offer Registration Statement or the Shelf Registration Statement (if
not then filed or effective, as applicable) and shall not be required to
maintain the effectiveness thereof or amend or supplement the Exchange Offer
Registration Statement or the Shelf Registration Statement, in all cases, for a
period (a “Delay Period”) expiring upon the earlier to occur of (i) in the case
of the immediately preceding clause (x), such Holder’s or Participating
Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto or
(ii) in the case of the immediately preceding clause (y), the date which is the
earlier of (A) the date on which such business purpose ceases to interfere with
the Company’s obligations to file or maintain the effectiveness of any such
Registration Statement pursuant to this Agreement or (B) 60 days after the
Company notifies the Holders of such good faith determination. There shall not
be more than 60 days of Delay Periods during any 12-month period. Each of the
Effectiveness Period and the Applicable Period, if applicable, shall be
extended by the number of days during any Delay Period. Any Delay Period will
not alter the obligations of the Company to pay Liquidated Damages under the
circumstances set forth in Section 4 hereof.

               In the event of any Delay Period pursuant to clause (y) of the preceding
paragraph, notice shall be given as soon as practicable after the Board of
Directors makes such a determination of the need for a Delay Period and shall
state, to the extent practicable, an estimate of the duration of such Delay
Period and shall advise the recipient thereof of the agreement of such Holder
provided in the next succeeding sentence. Each Holder, by his acceptance of
any Registrable Note, agrees that during any Delay Period, each Holder will
discontinue disposition of such Notes or Exchange Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such
Holder or Participating Broker-Dealer, as the case may be.

     Section 6. Registration Expenses

               All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers shall be borne by the Issuers, whether or not the
Exchange Offer Registration Statement or the Shelf Registration Statement is
filed or becomes effective or the Exchange Offer is consummated, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees

 

 

-18-

with respect to filings required to be made with the NASD in connection
with an underwritten offering and (B) fees and expenses of compliance with
state securities or Blue Sky laws (including, without limitation, reasonable
fees and disbursements of one counsel in connection with Blue Sky
qualifications of the Registrable Notes or Exchange Notes and determination of
the eligibility of the Registrable Notes or Exchange Notes for investment under
the laws of such jurisdictions (x) where the holders of Registrable Notes are
located, in the case of an Exchange Offer, or (y) as provided in Section 5(h)
hereof, in the case of Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses,
including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
or by the Holders of a majority in aggregate principal amount of the
Registrable Notes included in any Registration Statement or in respect of
Exchange Notes to be sold by any Participating Broker-Dealer during the
Applicable Period, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Issuers and reasonable
fees and disbursements of one special counsel for all of the sellers of
Registrable Notes (exclusive of any counsel retained pursuant to Section 7
hereof), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(m)(iii) hereof (including, without
limitation, the expenses of any special audit and “cold comfort” letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by any of the Issuers, (viii) internal expenses of the
Issuers (including, without limitation, all salaries and expenses of officers
and employees of any of the Issuers performing legal or accounting duties),
(ix) the expense of any audit, (x) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
and the obtaining of a rating of the securities, in each case, if applicable,
and (xi) the expenses relating to printing, word processing and distributing
all Registration Statements, underwriting agreements, indentures and any other
documents necessary in order to comply with this Agreement. Notwithstanding
the foregoing or anything to the contrary, each Holder shall pay all
underwriting discounts and commissions of any underwriters with respect to any
Registrable Notes sold by or on behalf of it.

     Section 7. Indemnification

               (a) Each Issuer, jointly and severally, agrees to indemnify and hold
harmless each Holder of Registrable Notes and each Participating Broker-Dealer
selling Exchange Notes during the Applicable Period, each Person, if any, who
controls any such Person within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, the agents, employees, officers and
directors of each Holder and each such Participating Broker-Dealer and the
agents, employees, officers and directors of any such controlling Person (each,
a “Participant”) from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including, but not limited to, reasonable
attorneys’ fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all reasonable amounts paid in
settlement of any claim or litigation) (collectively, “Losses”) to which they
or any of them may become subject under the Securities Act, the Exchange Act or
otherwise insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case

 

 

-19-

of the Prospectus, in the light of the circumstances under which they were
made, not misleading, provided that (A) the foregoing indemnity shall not be
available to any Participant insofar as such Losses are caused by any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to such Participant furnished
to the Company in writing by or on behalf of such Participant expressly for use
therein and (B) with respect to any such untrue statement or omission made in
any preliminary Prospectus, the indemnity contained in this Section 7(a) (to
the extent and only to the extent that such losses, claims, damages or
liabilities resulted from the untrue statement or omission described in clause
(2) below) shall not inure to the benefit of a Participant if it shall be
established that both (1) a copy of the amended or supplemented Prospectus was
not sent or given by such Participant to the Person asserting any such losses,
claims, damages or liabilities and such Participant was required by law to so
send or give such Prospectus to such Person and (2) the untrue statement or
omission in the preliminary Prospectus was corrected in the amended or
supplemented Prospectus, unless, in either case, such failure to deliver the
amended or supplemented Prospectus was a result of noncompliance by an Issuer
with any of its covenants or obligations in this Agreement.

               (b) Each Participant agrees, severally and not jointly, to indemnify and
hold harmless each Issuer, each Person, if any, who controls any Issuer within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, and each of their respective agents, employees, officers and
directors and the agents, employees, officers and directors of any such
controlling Person from and against any Losses to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise insofar
as such Losses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto) or Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by, arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the case of the Prospectus, in the light of the circumstances under which
they were made, not misleading, in each case to the extent, but only to the
extent, that any such Loss arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information relating to such Participant furnished
in writing to the Company by or on behalf of such Participant expressly for use
therein; provided, however, that with respect to any such untrue statement or
omission made in any preliminary Prospectus, the indemnity contained in this
Section 7(b) (to the extent and only to the extent that such losses, claims,
damages or liabilities resulted from an untrue statement or omission in the
preliminary Prospectus that was corrected in the amended or supplemented
Prospectus) shall not inure to the benefit of an Issuer if it shall be
established that (1) both (A) a copy of the amended or supplemented Prospectus
was sent or given by such Participant to the Person asserting any such losses,
claims, damages or liabilities and (B) the untrue statement or omission in the
preliminary Prospectus was corrected in the amended or supplemented Prospectus
or (2) such failure to deliver the amended or supplemented Prospectus was a
result of noncompliance by an Issuer with any of its covenants or obligations
in this Agreement.

               (c) Promptly after receipt by an indemnified party under subsection 7(a)
or 7(b) above of notice of the commencement of any action, suit or proceeding
(collectively, an “action”), such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the commencement of such action (but the failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
that it may have under this Section 7 except to the extent that it has been
prejudiced in any material respect by such failure or from any liability which
it otherwise may have).

 

 

-20-

In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement of such action, the
indemnifying party will be entitled to participate in such action, and to the
extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense of such action with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) the
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party will not be liable for
the fees and expenses of more than one counsel (together with appropriate local
counsel) designated by the indemnified party or parties at any time for all
indemnified parties in connection with any one action or separate but similar
or related actions arising out of the same general allegations or
circumstances. An indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent, which consent may not
be unreasonably withheld. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

               (d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 7 is for any reason held to be
unavailable from the indemnifying party, or is insufficient to hold harmless a
party indemnified under this Section 7, each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such aggregate Losses (i) in such proportion as is appropriate to reflect
the relative benefits received by each indemnifying party, on the one hand, and
each indemnified party, on the other hand, from the sale of the Notes to the
Initial Purchasers or the resale of the Registrable Notes by such Holder, as
applicable, or (ii) if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of each indemnified party, on the
one hand, and each indemnifying party, on the other hand, in connection with
the statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers, on the one hand, and each Participant, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds from the sale of
the Notes to the Initial Purchasers (net of discounts and commissions but
before deducting expenses) received by the Issuers are to (y) the total net
profit received by such Participant in connection with the sale of the
Registrable Notes. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers or such
Participant and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or alleged
statement or omission.

 

 

-21-

               (e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7, (i) in no case shall any Participant be required to contribute
any amount in excess of the amount by which the net profit received by such
Participant in connection with the sale of the Registrable Notes exceeds the
amount of any damages that such Participant has otherwise been required to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each Person, if any, who controls any Participant within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
director, officer, employee and agent of such Participant shall have the same
rights to contribution as such Participant, and each Person, if any, who
controls any Issuer within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and each director, officer, employee and agent of
such Issuer or Person who controls such Issuer shall have the same rights to
contribution as such Issuer. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought
from any obligation it or they may have under this Section 7 or otherwise,
except to the extent that it has been prejudiced in any material respect by
such failure; provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under this Section 7
for purposes of indemnification. Anything in this section to the contrary
notwithstanding, no party shall be liable for contribution with respect to any
action or claim settled without its written consent; provided, however, that
such written consent was not unreasonably withheld.

     Section 8. Rules 144 and 144A

               The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act
and, if at any time the Company is not required to file such reports, it will,
upon the request of any Holder or beneficial owner of Registrable Notes, make
available such information necessary to permit sales pursuant to Rule 144A
under the Securities Act, in each case for so long as any Registrable Notes
remain outstanding. The Issuers further covenant for so long as any
Registrable Notes remain outstanding that they will take such further action as
any Holder of Registrable Notes may reasonably request from time to time to
enable such Holder to sell Registrable Notes without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144(k) and Rule 144A under the Securities Act, as such Rules may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission.

     Section 9. Underwritten Registrations

               If any of the Registrable Notes covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Notes included in such offering and shall be reasonably acceptable
to the Company.

 

-22-

               No Holder of Registrable Notes may participate in any underwritten
registration hereunder if such Holder does not (a) agree to sell such Holder’s
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.

     Section 10. Miscellaneous

               (a) No Inconsistent Agreements. The Issuers have not entered, as of the
date hereof, and shall not enter, after the date of this Agreement, into any
agreement with respect to any of their securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not conflict with and are not inconsistent with, in any
material respect, the rights granted to the holders of any of the Issuers’
other issued and outstanding securities under any such agreements. The Issuers
have not entered and will not enter into any agreement with respect to any of
their securities which will grant to any Person piggy-back registration rights
with respect to any Registration Statement.

               (b) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes
as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.

               (c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given except pursuant to a written agreement
duly signed and delivered by (I) the Issuers and (II)(A) the Holders of not
less than a majority in aggregate principal amount of the then outstanding
Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Notes held by all
Participating Broker-Dealers; provided, however, that Section 7 and this
Section 10(c) may not be amended, modified or supplemented except pursuant to a
written agreement duly signed and delivered by each Holder and each
Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) adversely affected
by any such amendment, modification, supplement or waiver. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold pursuant to such Registration Statement.

               (d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:

		
	 	         (i) if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the records
of the registrar under the Indenture.

 

-23-

               (ii) if to the Issuers, at the address as follows:

	 	 	 
	 	 	
Meritage Corporation

8501 East Princess Drive

Suite 290

Scottsdale, Arizona 85255

Telephone: (480) 609-3330

Fax: (480) 998-9178

Attention: Larry W. Seay

               With a copy to:

	 	 	 
	 	 	
Snell & Wilmer L.L.P.

One Arizona Center

400 E. Van Buren Street

Phoenix, Arizona 85004-2223

Telephone: (602) 382-6000

Fax: (602) 382-6070

Attention: Steven D. Pidgeon, Esq.

               (iii) if to the Initial Purchasers, at the address as follows:

	 	 	 
	 	 	
UBS Securities LLC

299 Park Avenue

New York, New York 10171

Facsimile No.: (212) 821-5638

Attention: Corporate Finance

               With a copy to:

	 	 	 
	 	 	
Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Telephone: (212) 701-3000

Fax: (212) 269-5420

Attention: Daniel J. Zubkoff, Esq.

               All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by the recipient’s telecopier machine, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.

               Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.

 

-24-

               (e) Guarantors. So long as any Registrable Notes remain outstanding, the
Issuers shall cause each Person that becomes a guarantor of the Notes under the
Indenture to execute and deliver a counterpart to this Agreement which subjects
such Person to the provisions of this Agreement as a Guarantor. Each of the
Guarantors agrees to join the Company in all of its undertakings hereunder to
effect the Exchange Offer for the Exchange Notes and the filing of any Shelf
Registration Statement required hereunder.

               (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign holds
Registrable Notes.

               (g) Counterparts. This Agreement may be executed by facsimile and in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

               (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

               (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

               (j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.

               (k) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes
is required hereunder, Registrable Notes held by the Company or any of its
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.

               (l) Third-Party Beneficiaries. Holders and beneficial owners of
Registrable Notes and Participating Broker-Dealers are intended third-
party beneficiaries of this Agreement, and this Agreement may be enforced
by such Persons. No other Person is intended to be, or shall be construed as,
a third-party beneficiary of this Agreement.

               (m) Attorneys’ Fees. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys’ fees actually incurred
in addition to its costs and expenses and any other available remedy.

 

-25-

               (n) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all
prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders
on the one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof
are merged herein and replaced hereby.

 

S-1

               IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

	 	 	 	 	 
	 	 	MERITAGE CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: CFO, VP-Finance & Secretary
	 	 	 	 	 
	 	 	MONTEREY HOMES ARIZONA, INC.

MONTEREY HOMES CONSTRUCTION, INC.

MERITAGE HOMES CONSTRUCTION, INC.

MERITAGE HOMES OF ARIZONA, INC.

MERITAGE HOMES OF NORTHERN CALIFORNIA, INC.

MTH-HOMES NEVADA, INC.

MTH-TEXAS GP, INC.

MTH-TEXAS GP II, INC.

MTH-TEXAS LP, INC.

MTH-TEXAS LP II, INC.

HANCOCK-MTH BUILDERS, INC.

HANCOCK-MTH COMMUNITIES, INC.

	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	HULEN PARK VENTURE, L.L.C.
	 	 	 	 	 
	 	 	
By:
	 	Legacy/Monterey Homes L.P.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary

 

S-2

	 	 	 	 	 
	 	 	LEGACY/MONTEREY HOMES L.P.
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	LEGACY OPERATING COMPANY, L.P.
	 	 	 	 	 
	 	 	
By:
	 	Meritage Holdings, L.L.C.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	Legacy/Monterey Homes L.P.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	MERITAGE HOLDINGS, L.L.C.
	 	 	 	 	 
	 	 	
By:
	 	Legacy/Monterey Homes L.P.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary

 

S-3

	 	 	 	 	 
	 	 	MERITAGE PASEO CONSTRUCTION, LLC
	 	 	 	 	 
	 	 	
By:
	 	Meritage Homes Construction, Inc.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	MERITAGE PASEO CROSSING, LLC
	 	 	 	 	 
	 	 	
By:
	 	Meritage Homes of Arizona, Inc.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	MTH-HOMES TEXAS, L.P.
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP II, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	MTH-CAVALIER, LLC
	 	 	 	 	 
	 	 	
By:
	 	Monterey Homes Construction, Inc.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary

 

S-4

	 	 	 	 	 
	 	 	MTH GOLF, LLC
	 	 	 	 	 
	 	 	
By:
	 	Hancock-MTH Builders. Inc.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary
	 	 	 	 	 
	 	 	LEGACY-HAMMONDS MATERIALS, L.P.
	 	 	 	 	 
	 	 	
By:
	 	Meritage Holdings, L.L.C.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	Legacy/Monterey Homes, L.P.,

its Sole Member
	 	 	 	 	 
	 	 	
By:
	 	MTH-Texas GP, Inc.,

its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ Larry W. Seay

Name: Larry W. Seay

Title: VP-Secretary

 

S-5

	 	 	 	 	 
	 	 	UBS SECURITIES LLC

DEUTSCHE BANK SECURITIES INC.

BANC ONE CAPITAL MARKETS, INC.

FLEET SECURITIES, INC.
	 	 	 	 	 
	 	 	
By:
	 	UBS SECURITIES LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ Robert Crowley

Name: Robert Crowley

Title: Executive Director
	 	 	 	 	 
	 	 	
By:
	 	/s/ Maulin Shah

Name: Maulin Shah

Title: Associate Director

 

Schedule A

Guarantors

	1.	 	Meritage Homes Construction, Inc.
	 
	2.	 	Meritage Homes of Arizona, Inc.
	 
	3.	 	Meritage Homes of Northern California, Inc.
	 
	4.	 	Monterey Homes Arizona, Inc.
	 
	5.	 	Monterey Homes Construction, Inc.
	 
	6.	 	MTH-Homes Nevada, Inc.
	 
	7.	 	MTH-Texas GP, Inc.
	 
	8.	 	MTH-Texas GP II, Inc.
	 
	9.	 	MTH-Texas LP, Inc.
	 
	10.	 	MTH-Texas LP II, INC.
	 
	11.	 	Hancock-MTH Builders, Inc.
	 
	12.	 	Hancock-MTH Communities, Inc.
	 
	13.	 	Hulen Park Venture, L.L.C.
	 
	14.	 	Legacy-Hammonds Materials, L.P.
	 
	15.	 	Legacy/Monterey Homes L.P.
	 
	16.	 	Legacy Operating Company, L.P.
	 
	17.	 	Meritage Holdings, L.L.C.
	 
	18.	 	Meritage Paseo Construction, LLC
	 
	19.	 	Meritage Paseo Crossing, LLC
	 
	20.	 	MTH-Homes Texas, L.P.
	 
	21.	 	MTH-Cavalier, LLC
	 
	22.	 	MTH Golf, LLCEXHIBIT 10.02

                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT, effective as of the 1st day of January, 2003, by
and between ASPEN EXPLORATION CORPORATION, a public Delaware corporation, Suite
208, 2050 S. Oneida Street, Denver, CO 80224, (303) 639-9860 ("ASPEN"), and
ROBERT A. COHAN, 14617 Harvest Crest Avenue, Bakersfield, CA 93312, (661)
588-1539 ("COHAN"), sometimes collectively referred to as the "Parties."

                                   WITNESSETH

     WHEREAS, ASPEN has employed COHAN pursuant to an employment agreement dated
the 16th day of April, 1998 which agreement has expired; and

     WHEREAS, ASPEN wishes to continue to employ COHAN in the capacity of
President - West Coast Division, and COHAN wishes to continue to serve ASPEN in
such capacity, with the possibility understood by each of ASPEN and COHAN that
ASPEN may ask COHAN to serve as President pursuant to the terms of this
Agreement should the current President accept a different position within the
Company.

     NOW, THEREFORE, in consideration of the conditions and covenants set forth,
it is agreed as follows:

1.   TERM OF EMPLOYMENT: The current Employment Agreement, dated the 16th day of
April, 1998, is hereby terminated to the extent that there are any obligations
remaining due by either party thereunder. COHAN and ASPEN hereby agree that
COHAN shall be employed by ASPEN for a period of three years commencing January
1, 2003 and ending December 31, 2005, in accordance with the terms of this
Agreement. Thereafter, COHAN's employment shall continue on a year-to-year basis
unless COHAN or the Company gives notice to the other of an intention not to
renew this Agreement on such terms.

2.   DUTIES:

     (a) COHAN shall continue to be employed with the title of President - West
Coast Division, and shall be subject to the general direction and control of the
President of ASPEN. Should the Board of Directors of ASPEN appoint COHAN
President of ASPEN, and should COHAN accept such position, his activities shall
thereafter be subject to the general direction and control of the Board of
Directors.

     (b) COHAN shall have such authority and responsibilities as are customarily
performed by a person holding such positions, and consistent with the authority
and responsibility heretofore held by COHAN. COHAN shall devote substantially
full time, attention and energies to the business of ASPEN. COHAN shall not
engage in any business or render services to others who directly or indirectly
compete in direct or indirect competition with the oil and gas business of

Employment Agreement - Robert A. Cohan                                    Page 1

<PAGE>

ASPEN. This provision shall not preclude COHAN from making investments in any
entity or continuing to maintain COHAN's existing investments in certain oil and
gas properties as in the past. In addition, COHAN may make other passive
investments in oil and gas opportunities only after having first offered such
investment opportunity to ASPEN and thereafter only if ASPEN states to COHAN in
writing that COHAN may participate in such opportunity.

3.    COMPENSATION:

     (a) ASPEN shall pay COHAN a salary of $125,000 per year through April 15,
2003, at which time his salary will increase to $135,000 through April 15, 2004,
and then to $145,000 for the remaining term of this Agreement, subject to such
further salary increases and bonuses as the Board of Directors may determine to
be appropriate. ASPEN shall deduct and withhold such sums as are required by
statute and applicable laws for Social Security, taxes and otherwise, to be
deducted or withheld from compensation.

     (b) ASPEN shall provide COHAN the other benefits and expense reimbursement
as described in Section 5, below.

4.   DUTIES:

     (a) COHAN's primary responsibilities will involve the coordination of all
work required to drill or purchase oil and natural gas wells in the Sacramento
and San Joaquin Basins of California, and to operate those wells on behalf of
ASPEN to the extent ASPEN is the operator of such wells. Cohan will, among other
things, review numerous prospects in an effort to select and obtain quality
deals, lease acquisition, seismic acquisition, package preparation, fund
raising, permitting, AFE preparation, and oversee drilling, completion,
production, and marketing of oil & gas wells. COHAN will utilize various
consultants and subcontractors to assist in this work as needed. In addition to
the above described duties, COHAN may also be required to review and evaluate
prospects owned by ASPEN, or submitted by third parties to ASPEN in states other
than California.

     (b) COHAN will perform these duties in the manner that he has performed
these duties in the past, basing his operations out of the office that ASPEN has
provided to him in Bakersfield, California, for which ASPEN pays rent and
provides all utilities, office equipment (including furniture and computer
equipment and accessories), and supplies reasonably necessary or appropriate for
the conduct of ASPEN's business.

6.   BENEFITS AND EXPENSES:

     (a) While employed, ASPEN agrees to reimburse COHAN on his monthly expense
report submitted to ASPEN for all expenses incurred in appropriate pursuit of
business, including but not limited to, travel, meals, lodging, telephone and
other communication costs, materials and aid required to perform duties.

Employment Agreement - Robert A. Cohan                                    Page 2

<PAGE>

     (b) COHAN shall be entitled to participate in ASPEN's health, dental and
life insurance plans, paid vacations, and any other benefits available to full
time employees.

     (c) COHAN shall be entitled to four weeks paid vacation during each year of
this Agreement. No more than one week may be carried forward to any subsequent
year.

     (d) While employed, ASPEN agrees to reimburse COHAN on his monthly expense
report submitted to ASPEN for all expenses associated with the use of ASPEN's
four-wheel drive vehicle.

     (e) As a performance incentive, ASPEN will assign to COHAN an overriding
royalty and other interests as available and as agreed to by the Parties in each
project in which ASPEN becomes involved.

7.   TERMINATION:

     (a) Termination for Cause by Cohan. COHAN may terminate this Agreement and
his employment hereunder for Cause (as hereinafter defined) at any time upon
written notice, effective immediately.

     (i) When used in this Section 7(a), the term "Cause" shall mean any of the
     following events: (1) Any breach by ASPEN of its material obligations to
     COHAN as defined in this Agreement which remains uncured following 30 days'
     written notice to ASPEN specifying the breach; (2)Any material diminution
     of COHAN's responsibility and authority for and on behalf of ASPEN; (3)
     Should ASPEN not reappoint COHAN to the highest executive office that he
     holds at any time, or should the shareholders of ASPEN not reelect COHAN as
     a director at any meeting; (4) Any change of control of ASPEN, where the
     term "change of control" means any person not currently owning equity
     securities holding a vote equal to or greater than 15% of the votes that
     might be cast at a meeting of ASPEN's shareholders acquiring the right to
     cast votes at such meeting equal to or greater than 15%; (5) Any change in
     the Board of Directors of Aspen such that the combined vote of the existing
     directors of ASPEN is less than 75% of the members of the Board of
     Directors; and (6) Any merger, consolidation, or other business combination
     by which either ASPEN is not the surviving corporation, or as the surviving
     corporation ASPEN becomes a majority (or greater) owned subsidiary of
     another entity. COHAN may waive any of the foregoing by acting as an
     officer, director or shareholder of ASPEN to approve such event.

     (ii) Upon termination of this Agreement for "Cause" pursuant to this
     Section 7(a), ASPEN shall pay COHAN as its sole and exclusive liability
     hereunder, an amount equal to the greater of: (1) the amount due for the
     remaining term of this Agreement; or (2) six months of COHAN's then current
     monthly Base Salary. Payment shall be made within 30 days of such
     termination.

Employment Agreement - Robert A. Cohan                                    Page 3

<PAGE>

     (b) Termination for Cause by Aspen. ASPEN may terminate this Agreement and
COHAN's employment for Cause (as hereinafter defined) at any time upon written
notice, effective immediately.

     (i) When used in this Section 7(b), the term "Cause" shall mean (1) the
     continued failure by COHAN to substantially perform his duties for ASPEN in
     a reasonably professional manner, other than due to COHAN's Total and
     Permanent Disability (hereinafter defined) or death, for a period of 30
     days after a written demand for substantial performance is delivered to
     COHAN by the Board of Directors or President of ASPEN, which demand
     identifies the manner in which the Board of Directors or President believes
     COHAN has not substantially performed his duties; (2) the unauthorized
     dissemination by COHAN of Confidential Information (as hereinafter defined)
     of ASPEN; (3) the breach by COHAN of any other material term or provision
     of this Agreement to be performed by COHAN which has not been cured within
     30 days of receipt of written notice of such breach; or (4) any action by
     COHAN which causes ASPEN to be liable under any federal or state
     non-discrimination or equal employment opportunity law.

     (ii) Upon termination of COHAN's employment for Cause pursuant to this
     Section 7(b), ASPEN shall have no further obligation to pay any
     compensation to COHAN for periods after the effective date of the
     termination for Cause, except for Base Salary which accrued and was unpaid
     as of the termination date. In addition, the right to exercise any vested
     stock option shall terminate on the thirtieth (30th) day following the
     effective date of the termination of employment for Cause, notwithstanding
     any provision in any option agreement to the contrary.

     (c) Termination Upon Death or Total and Permanent Disability.

     (i) The employment of COHAN shall terminate upon (1) his death; or (2) ten
     business days after written notice by ASPEN of termination following
     COHAN's Total and Permanent Disability (as hereinafter defined).

     (ii) Upon termination by reason of death or during COHAN's Total and
     Permanent Disability, ASPEN shall pay COHAN as its sole and exclusive
     liability hereunder, an amount equal to the greater of: (1) the amount due
     for the remaining term of this Agreement; or (2) six months of COHAN's then
     current monthly Base Salary. The term "Total and Permanent Disability"
     means the incurrence of a Disability for a period (whether or not
     continuous) in excess of ninety (90) days, unless extended in writing by
     ASPEN. A Total and Permanent Disability shall be deemed to commence upon
     the expiration of such ninety (90) day period.

     (d) Termination by ASPEN Without Cause. ASPEN may terminate this Agreement
     and COHAN's employment without Cause prior to the expiration of the Term,
     in which case ASPEN shall pay COHAN as its sole and exclusive liability
     hereunder, an amount equal to the greater of: (i) the amount due for the
     remaining term of this Agreement; or (ii) nine months of COHAN's then
     current monthly Base Salary. Payment shall be made within five days of such
     termination.

Employment Agreement - Robert A. Cohan                                    Page 4

<PAGE>

8. COMPANY PROPERTY: All records, designs, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by COHAN
on behalf of ASPEN or its representatives, vendors or customers which pertain to
the business of ASPEN shall be and remain the property of ASPEN, and shall be
subject at all times to its discretion and control. Upon termination of his
employment or upon the demand of ASPEN at any time, COHAN shall deliver the same
to ASPEN within 24 hours of such termination or demand.

9. CONFIDENTIAL INFORMATION. ASPEN may disclose to COHAN (or COHAN may develop
during his employment with ASPEN) certain Confidential Information (defined
below). COHAN acknowledges and agrees that ASPEN has a reasonable, competitive
business interest in the Confidential Information and the Confidential
Information is the sole and exclusive property of ASPEN (or a third party
providing such information to ASPEN) and that ASPEN or such third party owns all
worldwide rights therein under patent, copyright, trade secret, confidential
information, moral right or other property right. COHAN acknowledges that his
obligations with regard to the Confidential Information shall remain in effect
while COHAN is employed by ASPEN and for a period of one (1) year thereafter.
"Confidential Information" shall mean any confidential or proprietary
information possessed by ASPEN or any direct or indirect subsidiary of ASPEN or
relating to the business of ASPEN, including, without limitation, any
confidential "know-how," trade secrets, pricing policies, market studies,
business plans and operational methods. Provided, however, that COHAN shall not
be restricted from disclosing or using Confidential Information that COHAN
establishes: (1) is or becomes generally available to the public other than as a
result of an unauthorized disclosure; (2) becomes available to COHAN in a manner
that is not in contravention of applicable law from a source that is not bound
by a confidential relationship with ASPEN or by a confidentiality or other
similar agreement; or (3) is required to be disclosed by law, court order or
other legal process.

10.  GENERAL PROVISIONS:

     (a) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

     (b) If any provision of this Agreement, or the application thereof to any
person, place or circumstance, shall be held by a court of competent
jurisdiction to be illegal, invalid, unenforceable or void, then such provision
shall be enforced to the extent that it is not illegal, invalid, unenforceable
or void, and the remainder of this Agreement, as well as such provision as
applied to other persons, places or circumstances, shall remain in full force
and effect.

     (c) With regard to any power, remedy or right provided in this Agreement or
otherwise available to any party, no waiver or extension of time shall be
effective unless expressly contained in a writing signed by the waiving party,
no alteration, modification or impairment shall be implied by reason of any
previous waiver, extension of time, delay or omission in exercise or other
indulgence, and waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or condition itself.

Employment Agreement - Robert A. Cohan                                    Page 5

<PAGE>

     (d) All notices, demands, or other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
shall be deemed to have duly given or delivered (i) when delivered personally;
(ii) sent by telephone facsimile transmission; or (iii) sent via a nationally
recognized overnight courier to the recipient. Such notices, demands and other
communications will be sent to the address indicated in the first paragraph
hereof, or to such other address as any party may specify by notice given to the
other party in accordance with this Section. The date of giving any such notice
shall be (i) the date of hand delivery; (ii) the date sent by telephone
facsimile if a business day or the first business day thereafter; or (iii) the
business day after delivery to the overnight courier service.

     (e) This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Colorado without giving effect to any choice
or conflict of law provision or rule (whether of the State of Colorado or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Colorado. Without limitation of the
foregoing, COHAN and ASPEN specifically acknowledge that they do not intend the
laws of the State of California to be applicable to this employment
relationship.

     (f) This Agreement constitutes the entire agreement among the Parties with
respect to the subject matter of this Agreement and supersedes any prior
agreement or understanding, whether written and oral, among the Parties or
between any of them with respect to the subject matter of this Agreement. There
are no representations, warranties, covenants, promises or undertakings, other
than those expressly set forth or referred to herein.

     (g) This Agreement may be amended, modified or waived only by a written
agreement signed by each of the Parties hereto.

     (h) This Agreement shall be binding upon and shall inure to the benefit of
the Parties and their respective successors and, if applicable, permitted
assigns.

     (i) Each party intends that this Agreement shall not benefit or create any
right or cause of action in any person other than the Parties or as specifically
expressed in this Agreement.

     (j) This Agreement may be executed in one or more counterparts, each of
which shall constitute an original but when taken together shall constitute but
one instrument.

     (k) Each party to this Agreement shall bear all of its own expenses in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, including without limitation all fees and
expenses of its agents, representatives, counsel and accountants.

Employment Agreement - Robert A. Cohan                                    Page 6

<PAGE>

     11. REMEDIES: In the event of any disagreement or dispute arising
hereunder, the same shall be subject to Colorado law and be submitted to
arbitration before the Judicial Arbiter Group, Inc., Denver, Colorado, in
accordance with the rules of such group.

     IN WITNESS WHEREOF, the Board of Directors of ASPEN have approved this
Agreement by resolutions dated January 1, 2003, and the Parties have executed
this Agreement this 15th day of December, 2002, to be effective as of the date
and year first above written.

ASPEN EXPLORATION CORPORATION

By:  /s/  R. V. Bailey
   -------------------------------
          R. V. Bailey, President
Date:     December 20, 2002

EMPLOYEE

By:  /s/  Robert A. Cohan
   -------------------------------
          Robert A. Cohan
Date:     December 15, 2002

Employment Agreement - Robert A. Cohan                                    Page 7

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