Document:

ex4-1.htm

    
      

    

    Exhibit
4.1

     

     

    SECOND
SUPPLEMENTAL INDENTURE

     

    This
SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”) is dated as
of February 23, 2009 (the “Effective Date”), and made by and among ASHTON WOODS
USA L.L.C., a Nevada limited liability company (the “Issuer”), ASHTON WOODS
FINANCE CO., a Delaware corporation (the “Co-Issuer” and, together with Issuer,
the “Issuers”), the guarantors listed on the signature page hereto and HSBC Bank
USA, N.A., as successor trustee (the “Trustee”), to the Indenture, dated as of
September 21, 2005, among the Issuers, the guarantors party thereto (the
“Original Guarantors”) and U.S. Bank National Association, as original trustee
(the “Original Trustee”), as amended by the First Supplemental Indenture, dated
as of December 9, 2005, among the Issuers, Ashton Woods Transportation, LLC (the
“Additional Guarantor” and, together with Original Guarantors, the
“Guarantors”), the Original Guarantors and the Original Trustee (as supplemented
and amended, the “Indenture”).  Capitalized terms used in this Second
Supplemental Indenture and not otherwise defined herein shall have the meanings
assigned to such terms in the Indenture.

     

    WITNESSETH:

     

    WHEREAS,
the Issuers, the Guarantors and the Original Trustee have heretofore executed
and delivered the Indenture providing for the issuance of 9.5% Senior
Subordinated Notes due 2015 (the “Notes”) of the Issuers;

     

    WHEREAS,
the Issuer has entered into a Lock-Up and Support Agreement, dated as of
December 1, 2008 (the “Lock-Up Agreement”), regarding a proposed restructuring
of the indebtedness and equity of the Issuer with (i) certain beneficial owners
(or investment managers, agents, affiliates, advisors or other authorized
representatives for the beneficial owners) of the Notes, and (ii) the equity
owners of the Issuer and their affiliates party thereto;

     

    WHEREAS,
pursuant to the Lock-Up Agreement, the Issuers have launched an exchange offer
and consent solicitation, and the Issuers have offered to exchange any and all
of the outstanding Notes upon the terms and subject to the conditions set forth
in the Offering Memorandum and Consent Solicitation Statement, dated January 13,
2009 and Letter of Transmittal and Consent, each as may be amended, supplemented
or modified (the “Exchange Offer and Consent Solicitation”);

     

    WHEREAS,
Section 8.02 of the Indenture provides that the Issuers, the Guarantors and the
Trustee may amend certain provisions of the Indenture, with the consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding; provided, however, that an amendment to Section 4.19 of the
Indenture requires the consent of the Holders of not less than two-thirds in
aggregate principal amount of the Notes then outstanding;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
the Exchange Offer and Consent Solicitation is conditioned upon, among other
things, the proposed amendments to the Indenture set forth herein (the “Proposed
Amendments”) having been approved by the requisite percentage of the aggregate
principal amount of all outstanding Notes, with this Supplemental Indenture
becoming effective immediately prior to the closing of the Exchange Offer and
Consent Solicitation with respect to the Indenture upon the acceptance for
exchange of Notes representing at least 95% of the total principal amount of the
outstanding Notes pursuant to the Exchange Offer and Consent Solicitation, which
condition may be waived in certain circumstances (the
“Acceptance”);

     

    WHEREAS,
the Issuers have received and delivered to the Trustee the requisite consents to
effect the Proposed Amendments under the Indenture;

     

    WHEREAS,
the Issuers and Guarantors have been authorized by a resolution of their Board
of Directors or other applicable governing body to enter into this Supplemental
Indenture and the Trustee has received an Officers’ Certificate and Opinion of
Counsel pursuant to Section 8.06 of the Indenture; and

     

    WHEREAS,
all other acts and proceedings required by law, by the Indenture and the
organizational documents of the Issuers and Guarantors to make this Supplemental
Indenture a valid and binding agreement for the purposes expressed herein, in
accordance with its terms, have been duly done and performed.

     

    NOW
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, and for other good and valuable consideration the receipt of
which is hereby acknowledged, and for the equal and proportionate benefit of the
Holders of the Notes, the Issuers, the Guarantors and the Trustee hereby agree
as follows:

     

    Article
I.

     

    Amendments to the
Indenture

     

    1.1    Amendment of Section
4.02.  Section 4.02 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.2    Amendment of Section
4.03.  Section 4.03 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.3    Amendment of Section
4.05.  Section 4.05 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.4    Amendment of Section
4.06.  Section 4.06 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.5    Amendment of Section
4.08.  Section 4.08 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.6    Amendment of Section
4.09.  Section 4.09 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.7    Amendment of Section
4.10.  Section 4.10 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.8    Amendment of Section
4.11.  Section 4.11 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.9    Amendment of Section
4.12.  Section 4.12 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.10   
  Amendment of Section
4.13.  Section 4.13 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.11   
  Amendment of Section
4.14.  Section 4.14 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.12   
  Amendment of Section
4.15.  Section 4.15 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.13   
  Amendment of Section
4.16.  Section 4.16 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.14   
  Amendment of Section
4.17.  Section 4.17 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.15  
   Amendment of Section
4.18.  Section 4.18 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.16   
  Amendment of Section
4.19.  Section 4.19 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.17   
  Amendment of Section
4.20.  Section 4.20 of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.18   
  Amendment of Article
Five.  Article Five of the Indenture is hereby deleted in its
entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.19   
  Amendment of Section
6.01(3).  Section 6.01(3) of the Indenture is hereby deleted in
its entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.20   
  Amendment of Section
6.01(5).  Section 6.01(5) of the Indenture is hereby deleted in
its entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.21   
  Amendment of Section
6.01(6).  Section 6.01(6) of the Indenture is hereby deleted in
its entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.22   
  Amendment of Section
6.01(9).  Section 6.01(9) of the Indenture is hereby deleted in
its entirety and is replaced with the following:  “[intentionally
omitted]”.

     

    1.23   
  Amendment of Defined
Terms.  All terms defined in Sections 1.01 and 1.02 of the
Indenture and contained in the Articles, Sections and Clauses of the Indenture
deleted pursuant to Sections 1.1 through 1.22, inclusive, of this Supplemental
Indenture, but not otherwise used elsewhere in the Indenture, are hereby deleted
in their entirety.

     

    1.24
     Amendment of Section
References.  All references in the Indenture to the Articles,
Sections and Clauses of the Indenture deleted pursuant to this Article I of this
Supplemental Indenture are hereby deleted in their entirety.

     

    1.25
     Amendment to Notes and
Guarantee.  The Notes and Guarantee are hereby amended to
delete all provisions inconsistent with the amendments to the Indenture effected
by this Article I of this Supplemental Indenture.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Article
II.

     

    Waiver

     

    2.1    Waiver of Past Defaults and
Events of Defaults.  As of the date hereof, all Defaults and/or
Events of Default or other consequences due to the Issuers’ or Guarantors’
failure to comply with any of the terms or conditions of the Indenture, either
on or before the Effective Date of this Supplemental Indenture, have been waived
by Holders of a majority of the principal amount of the indebtedness outstanding
to the extent permitted by Section 6.04 of the Indenture.

     

    Article
III.

     

    Effectiveness

     

    3.1    Effectiveness of this
Supplemental Indenture.  This Supplemental Indenture is entered
into pursuant to and consistent with Section 8.02 of the Indenture, and nothing
herein shall constitute a waiver, amendment, modification or deletion of any
provision of the Indenture requiring the consent of each Holder affected thereby
pursuant to clauses (b)(1) through (10) of Section 8.02 of the Indenture other
than with respect to Holders who provided consent to such waiver, amendment,
modification or deletion.  Upon the execution of this Supplemental
Indenture by the Issuers, the Guarantors and the Trustee, and the Acceptance,
the Indenture shall be amended and supplemented in accordance herewith, and this
Supplemental Indenture shall form a part of the Indenture for all purposes and
each Holder shall be bound thereby.

     

    Article
IV.

     

    Miscellaneous

     

    4.1    Continuing Effect of the
Indenture.  Except as expressly provided herein, all of the
terms, provisions and conditions of the Indenture and the Notes outstanding
thereunder shall remain in full force and effect.

     

    4.2    Reference and Effect on the
Indenture.  On and after the Acceptance, each reference in the
Indenture to “the Indenture,” “this Indenture,” “hereunder,” “hereof” or
“herein” shall mean and be a reference to the Indenture as supplemented by this
Second Supplemental Indenture, unless the context otherwise
requires.

     

    4.3    Trust Indenture Act
Controls.  If any provision of this Second Supplemental
Indenture limits, qualifies or conflicts with another provision of this Second
Supplemental Indenture or the Indenture that is required to be included by the
Trust Indenture Act of 1939, as amended, as in force at the date this Second
Supplemental Indenture is executed, the provision required by said Act shall
control.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.4    Governing
Law.  This Second Supplemental Indenture shall be governed by,
and construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required
thereby.

     

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

     

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

     

    4.7    Trustee.  The
Trustee makes no representations as to the validity or sufficiency of this
Second Supplemental Indenture.

     

    

     

    [Remainder
of the page intentionally left blank.]

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

    

    
      	 
      	
              ASHTON
      WOODS USA L.L.C.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Jerry Patava

            	 
      
	 
      	 
      	
              Name:

            	
              Jerry
      Patava

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              ASHTON
      WOODS FINANCE CO.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Jerry Patava

            	 
      
	 
      	 
      	
              Name:

            	
              Jerry
      Patava

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              ASHTON
      WOODS TRANSPORTATION, LLC

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:
      ASHTON WOODS USA L.L.C., sole member

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      

    

     

    

      [Second
Supplemental Indenture Signature Page]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              ASHTON
      ATLANTA RESIDENTIAL, L.L.C.

            	 
      
	 
      	
              CANYON
      REALTY L.L.C.

            	 
      
	 
      	
              ASHTON
      DALLAS RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      HOUSTON RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      WOODS CORPORATE, LLC

            	 
      
	 
      	
              ASHTON
      ORLANDO RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      BURDEN, LLC

            	 
      
	 
      	
              ASHTON
      WOODS ARIZONA L.L.C.

            	 
      
	 
      	
              ASHTON
      TAMPA RESIDENTIAL, LLC

            	 
      
	 
      	
              ASHTON
      DENVER RESIDENTIAL, LLC

            	 
      
	 
      	
              ASHTON
      WOODS LAKESIDE L.L.C.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              ASHTON
      WOODS CONSTRUCTION, LLC

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:  ASHTON
      WOODS ARIZONA L.L.C., sole

              member

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              ASHTON
      WOODS ORLANDO LIMITED PARTNERSHIP

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:  ASHTON
      WOODS LAKESIDE L.L.C.,

              general
      partner

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      

    

     

     

    
      [Second
Supplemental Indenture Signature Page]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              ASHTON
      BROOKSTONE, INC.

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Thomas Krobot

            	 
      
	 
      	 
      	
              Name:

            	
              Thomas
      Krobot

            	 
      
	 
      	 
      	
              Title:

            	
              Authorized
      Signatory

            	 
      

    

     

     

    
      [Second
Supplemental Indenture Signature Page]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 
      	
              HSBC
      BANK USA, N.A., as successor Trustee

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By

            	
              /s/ Robert A. Conrad

            	 
      
	 
      	 
      	
              Name:

            	
              Robert
      A. Conrad

            	 
      
	 
      	 
      	
              Title:

            	
              Vice
      President

            	 
      

    

     

     

     

    
      [Second
Supplemental Indenture Signature Page]ex4-2.htm

    
      

    

    Exhibit
4.2

     

     

    THIS
SECURITY WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” FOR U.S. FEDERAL INCOME TAX
PURPOSES.  ASHTON WOODS USA L.L.C. WILL PROMPTLY MAKE AVAILABLE TO THE
HOLDER HEREOF INFORMATION REGARDING THE ISSUE PRICE, ISSUE DATE, YIELD TO
MATURITY, AMOUNT OF ORIGINAL ISSUE DISCOUNT (AND ANY OTHER INFORMATION REQUIRED
TO BE MADE AVAILABLE TO THE HOLDER PURSUANT TO U.S. TREASURY REGULATIONS), UPON
THE WRITTEN REQUEST OF SUCH HOLDER DIRECTED TO ASHTON WOODS USA L.L.C., 1405 OLD
ALABAMA ROAD, SUITE 200, ROSWELL, GA 30076, ATTN:  CHIEF FINANCIAL
OFFICER.

     

    ANY
GLOBAL NOTE AUTHENTICATED AND DELIVERED HEREUNDER SHALL BEAR A LEGEND (WHICH
WOULD BE IN ADDITION TO ANY OTHER LEGENDS REQUIRED IN THE CASE OF A RESTRICTED
NOTE) IN SUBSTANTIALLY THE FOLLOWING FORM:

     

    THIS NOTE
IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY.  THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.

     

    UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (A NEW YORK CORPORATION) (“DTC”) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     

    THE NOTE (OR ITS PREDECESSOR) EVIDENCED
HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”), OR ANY STATE OR OTHER SECURITIES LAWS.  THIS NOTE AND
ANY INTEREST OR PARTICIPATION HEREIN (A) MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1) (A) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECURITIES
ACT, IF AVAILABLE, OR (C) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A
“U.S. PERSON” IN AN “OFFSHORE TRANSACTION” (EACH AS DEFINED IN REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED) MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT, (2) TO US OR ANY OF OUR
SUBSIDIARIES OR (3) UNDER AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY LATER PURCHASER FROM IT OF THE
RESALE RESTRICTIONS DESCRIBED IN (A) ABOVE.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CUSIP
 045086 AC9

     

    ASHTON
WOODS USA L.L.C.

    ASHTON
WOODS FINANCE CO.

     

    
      	
              No.         

            	
              $

            

    

     

    11.0%
SENIOR SUBORDINATED NOTE DUE 2015

     

    ASHTON
WOODS USA L.L.C., a Nevada limited liability company (the “Issuer”), and ASHTON
WOODS FINANCE CO., a Delaware corporation (the “Co-Issuer” and,
together with the Issuer, the “Issuers”), for value
received, promises to pay to CEDE & CO. or registered assigns the principal
sum of
$               dollars
on June 30, 2015.

     

    Interest
Payment Dates:  June 30 and December 30, commencing June 30,
2012.

     

    Record
Dates:  June 15 and December 15.

     

    Reference
is made to the further provisions of this Note contained herein, which will for
all purposes have the same effect as if set forth at this place.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by
facsimile by its duly authorized officers.

     

    
      	 
      	
              ASHTON
      WOODS USA L.L.C.,

            	 
      
	 
      	
              as
      Issuer

            	 
      
	 	 	 
	 	 	 
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              ASHTON
      WOODS FINANCE CO.,

            	 
      
	 
      	
              as
      Co-Issuer

            	 
      
	 	 	 
	 	 	 
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      

    

     

    Dated:

     

    Certificate
of Authentication

     

    This is
one of the 11.0% Senior Subordinated Notes due 2015 referred to in the
within-mentioned Indenture.

     

    
      	 
      	U.S.
      BANK NATIONAL ASSOCIATION,	 
      
	 
      	as
      Trustee	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	 
      	 
      

    

     

    Dated:

     

    
      

       

      [Rule
144A Note Signature Page]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ASHTON
WOODS USA L.L.C.

    ASHTON
WOODS FINANCE CO.

     

    11.0%
SENIOR SUBORDINATED NOTE DUE 2015

     

    1.           Interest.  ASHTON
WOODS USA L.L.C., a Nevada limited liability company (the “Issuer”), and ASHTON
WOODS FINANCE CO., a Delaware corporation (the “Co-Issuer” and,
together with the Issuer, the “Issuers”), promises
to pay, until the principal hereof is paid or made available for payment,
interest on the principal amount set forth on the face hereof at a rate of 11.0%
per annum, commencing on the third anniversary of February 23, 2009 (the “Issue
Date”).  No interest will accrue during the period from the
Issue Date until February 23, 2012.  Interest hereon will accrue from
and including the most recent date to which interest has been paid or, if no
interest has been paid, from and including February 23, 2012 to but excluding
the date on which interest is paid.  Interest shall be payable in
arrears on each June 30 and December 30, commencing June 30, 2012 )(each an
“Interest Payment
Date”).  Interest will be computed on the basis of a 360-day
year of twelve 30-day months.  For the period commencing on the third
anniversary of the Issue Date until and including the first interest payment
date of June 30, 2012, interest shall be required to be paid in cash only to the
extent that the Consolidated Fixed Charge Coverage Ratio, as defined in the
Indenture and calculated assuming the payment of such interest in cash, exceeds
1.75 to 1.00.  If the Consolidated Fixed Charge Coverage Ratio
calculated as stated above does not exceed 1.75 to 1.00, the first interest
payment may, at the Issuers’ option, be paid in kind (a “PIK Payment”) based
on an annual rate of 13.05% for such one interest payment period
only.  If the Issuers determine to exercise their option to make a PIK
Payment, by notice to the Trustee the principal amount of this Note shall be
increased by an amount equal to the amount of interest, accruing at an annual
rate of 13.05% due on the first Interest Payment Date on the principal amount of
this Note (rounded up to the nearest $1.00).  From and after the date
of any such increase in the principal amount of this Note as a result of a PIK
Payment, this Note will bear interest on such increased principal amount from
and after the date of such PIK Payment.  The Issuers shall pay
interest on overdue principal and on overdue interest (to the full extent
permitted by law) at a rate of 11.0% per annum.

     

    2.           Method of
Payment.  The Issuers will pay interest hereon (except
defaulted interest) to the Persons who are registered Holders at the close of
business on June 15 or December 15 next preceding the interest payment date
(whether or not a Business Day).  Holders must surrender Notes to a
Paying Agent to collect principal payments.  The Issuers will pay
principal and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts or by making
a PIK Payment to the extent provided above.  Interest may be paid by
check mailed to the Holder entitled thereto at the address indicated on the
register maintained by the Registrar for the Notes.

     

    3.           Paying Agent and
Registrar.  Initially, U.S. Bank National Association (the
“Trustee”) will
act as a Paying Agent and Registrar.  The Issuers may change any
Paying Agent or Registrar without notice.  Neither of the Issuers nor
any of their Affiliates may act as Paying Agent or Registrar.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.           Indenture and
Subordination.  The Issuers issued the Notes under an Indenture
dated as of February 23, 2009 (the “Indenture”) among the
Issuers, the Guarantors (as defined in the Indenture) and the
Trustee.  This is one of an issue of Notes of the Issuers issued, or
to be issued, under the Indenture.  The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as amended
from time to time (the “Act”).  The
Notes are subject to all such terms, and Holders are referred to the Indenture
and the Act for a statement of them.  The payment of the Notes will,
to the extent set forth in the Indenture, rank pari passu with any 9.5%
senior subordinated notes not exchanged in the Exchange Offer and be
subordinated in right of payment to the prior payment in full in cash or cash
equivalents of all Senior Debt.  Capitalized and certain other terms
used herein and not otherwise defined have the meanings set forth in the
Indenture.

     

    5.           Optional Redemption.
(a)  The Issuer, at its option, may redeem the Notes at any time or
from time to time, in whole or in part, (a) until the fifth anniversary of the
date of Issue Date at a redemption price equal to 111% of the principal amount
to be redeemed together  with accrued and unpaid interest thereon, if
any, to and excluding the Redemption Date, (b) after the fifth anniversary
through the sixth anniversary of the Issue Date at a redemption price equal to
105.5% of the principal amount to be redeemed, together with accrued and unpaid
interest thereon, if any, to and excluding the Redemption Date, and (c)
thereafter 100% of the principal amount to be redeemed, together with accrued
and unpaid interest thereon, if any, to and excluding the Redemption
Date.

     

     In
the event of a redemption of fewer than all of the Notes, the Trustee shall
select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, while such Notes are listed or,
if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or in such
other manner as the Trustee shall deem fair and appropriate; provided, however that no Notes of a
principal amount of $1,000 or less shall be redeemed in part.  The
Notes will be redeemable in whole or in part upon not less than 30 nor more than
60 days’ prior written notice, mailed by first class mail to a Holder’s last
address as it shall appear on the register maintained by the Registrar of the
Notes.  On and after any redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption unless the Issuers
shall fail to redeem any such Note.

     

    6.           Notice of
Redemption.  Notice of redemption will be mailed by first-class
mail at least 30 days but not more than 60 days before the Redemption Date to
each Holder of Notes to be redeemed at his registered address, except that
redemption notices may be mailed more than 60 days prior to a Redemption Date if
the notice is issued in connection with a satisfaction and discharge of the
Indenture.  On and after the Redemption Date, unless the Issuers
default in making the redemption payment, interest ceases to accrue on Notes or
portions thereof called for redemption.

     

    7.           Offers To
Purchase.  The Indenture provides that upon the occurrence of a
Change of Control or an Asset Sale and subject to further limitations contained
therein, the Issuers shall make an offer to purchase outstanding Notes in
accordance with the procedures set forth in the Indenture.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.           Denominations, Transfer,
Exchange.  The Notes are in registered form without coupons in
denominations of $1.00 and integral multiples of $1.00.  A Holder may
transfer or exchange Notes in accordance with the Indenture.  The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture.  Without the prior written
consent of the Issuer, the Registrar need not (1) register the transfer of or
exchange any Notes or portion of a Note selected for redemption, (2) register
the transfer of or exchange any Notes for a period of 15 days before a selection
of Notes to be redeemed or (3) register the transfer or exchange of a Note
between a record date and the next succeeding interest payment
date.

     

    9.           Persons Deemed
Owners.  The registered Holder of this Note may be treated as
the owner of this Note for all purposes.

     

    10.         Unclaimed
Money.  If money for the payment of principal or interest
remains unclaimed for two years, the Trustee will pay the money back to the
Issuers at its written request.  After that, Holders entitled to the
money must look to the Issuers for payment as general creditors unless an
“abandoned property” law designates another Person.

     

    11.         Amendment, Supplement,
Waiver, Etc.  The Issuers, the Guarantors and the Trustee (if a
party thereto) may, without the consent of the Holders of any outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Act
and making any change that does not materially adversely affect the rights of
any Holder.  Other amendments and modifications of the Indenture or
the Notes may be made by the Issuers, the Guarantors and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the outstanding Notes or two-thirds of such aggregate principal amount
as to amendments or modifications relating to provisions governing Change of
Control Offers, subject to certain exceptions requiring the consent of the
Holders of the particular Notes to be affected.

     

    12.         Restrictive
Covenants.  The Indenture imposes certain limitations on the
ability of the Issuer and its Restricted Subsidiaries to, among other things,
incur additional Indebtedness, make payments in respect of their Equity
Interests or certain Indebtedness, make certain Investments, create or incur
Liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions and on the ability of the Issuer to merge or consolidate with any
other Person or transfer all or substantially all of the Issuer’s, the
Co-Issuer’s or any Guarantor’s assets.  Such limitations are subject
to a number of important qualifications and exceptions.  Pursuant to
Section 4.04, the Issuers must annually report to the Trustee on compliance with
such limitations.

     

    13.         Successor
Corporation.  When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article Five of the Indenture, the
predecessor corporation will, except as provided in Article Five, be released
from those obligations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    14.         Defaults and
Remedies.  Events of Default are set forth in the
Indenture.  Subject to certain limitations in the Indenture, if an
Event of Default (other than an Event of Default specified in Section 6.01(7) or
(8) with respect to the Issuer) occurs and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the outstanding
Notes may, by written notice to the Trustee and the Issuers, and the Trustee
upon the request of the Holders of not less than 25% in aggregate principal
amount of the outstanding Notes shall, declare all principal of and accrued
interest on all Notes to be immediately due and payable and such amounts shall
become immediately due and payable.  If an Event of Default specified
in Section 6.01(7) or (8) occurs with respect to the Issuer, the principal
amount of and interest on, all Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.  Holders may not enforce the Indenture or
the Notes except as provided in the Indenture.  The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes.  Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power.  The Trustee may withhold from Holders
notice of any continuing default (except a default in payment of principal,
premium, if any, or interest on the Notes or a default in the observance or
performance of any of the obligations of the Issuers under Article Five of the
Indenture) if it determines that withholding notice is in their best
interests.

     

    15.         Trustee Dealings with
Company.  The Trustee, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Issuers or
their Affiliates, and may otherwise deal with the Issuers or their Affiliates,
as if it were not Trustee.

     

    16.         Discharge.  The
Issuers’ obligations pursuant to the Indenture will be discharged, except for
obligations pursuant to certain sections thereof, subject to the terms of the
Indenture, upon the payment of all the Notes or upon the irrevocable deposit
with the Trustee of United States dollars or U.S. Government Obligations
sufficient to pay when due principal of and interest on the Notes to maturity or
redemption, as the case may be.

     

    17.         Guarantees.  This
Note will be entitled to the benefits of certain Guarantees made for the benefit
of the Holders.  Reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and
obligations thereunder of the Guarantors, the Trustee and the
Holders.

     

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

     

    19.         Governing
Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York.  The Trustee, the Issuers,
the Guarantors and the Holders agree to submit to the jurisdiction of the courts
of the State of New York in any action or proceeding arising out of or relating
to the Indenture or the Notes.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
Issuers will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be made to:

     

    ASHTON
WOODS USA L.L.C.

    1405 Old
Alabama Road

    Suite
200

    Roswell,
GA  30076

    Attention:  Chief
Financial Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    I or we
assign and transfer this Note to:

     

    (Insert
assignee’s social security or tax I.D. number)

     

      
        

      

    

    
      
        

      

      
        

      

    

    (Print or
type name, address and zip code of assignee)

     

    and
irrevocably appoint:

     

    
      
        

      

      
        

      

       

    

    Agent to
transfer this Note on the books of the Issuer.  The Agent may
substitute another to act for him.

     

    [Check
One]

     

    
      	
              o  (a)

            	
              this
      Note is being transferred in compliance with the exemption from
      registration under the Securities Act provided by Rule 144A
      thereunder.

            
	 	 
	
              or

            
	 
	
              o  (b)

            	
              this
      Note is being transferred other than in accordance with (a) above and
      documents are being furnished which comply with the conditions of transfer
      set forth in this Note and the
Indenture.

            

    

     

    If none
of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.

     

    
      	
              Date:

            	 
      	
              Your
      Signature:  

            	 
      
	 
      	 
      	 
      	
              (Sign
      exactly as your name appears on the face of this
  Note)

            

    

     

     

    
      	
              Signature
      Guarantee:

            	 
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
GUARANTEE

     

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

     

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

     

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

     

    
      	
              Dated:

            	 	 
      	 
      
	 
      	 	 
      	
              NOTICE:  To
      be executed by an executive officer

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    OPTION OF
HOLDER TO ELECT PURCHASE

     

    If you
want to elect to have all or any part of this Note purchased by the Issuers
pursuant to Section 4.08 or Section 4.17 of the Indenture, check the appropriate
box:

     

    
      	 
      	o	
              Section
      4.08

            	o	
              Section
      4.17

            

    

     

    If you
want to have only part of the Note purchased by the Issuers pursuant to
Section 4.08 or Section 4.17 of the Indenture, state the amount you
elect to have purchased:

     

    
      	
              $

            	 
      	
               

            
	(multiple
      of $1,000)	 
      
	 	 
	
              Date:

            	 
      	 
      

    

    

     

    
      	 	
              Your
      Signature:

            	 
      
	 	 
      	
              (Sign
      exactly as your name appears on the face of this
  Note)

            

    

    

    
      	 
      	 
      
	
              Signature
      Guaranteed

            	 
      

    

     

    SIGNATURE
GUARANTEE

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOTATION
OF GUARANTEE

     

    Each of
the undersigned (the “Guarantors”) hereby
jointly and severally unconditionally guarantees, to the extent set forth in the
Indenture dated as of February 23, 2009 by and among ASHTON WOODS USA L.L.C., a
Nevada limited liability company (the “Issuer”), and ASHTON
WOODS FINANCE CO., a Delaware corporation (the “Co-Issuer” and,
together with the Issuer, the “Issuers”), the
Guarantors, as guarantors, and U.S. Bank National Association, as trustee (the
“Trustee”) (as
amended, restated or supplemented from time to time, the “Indenture”), and
subject to the provisions of the Indenture, (a) the due and punctual
payment of the principal of, and premium, if any, and interest on the Notes,
when and as the same shall become due and payable, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on overdue
principal of, and premium and, to the extent permitted by law, interest, and the
due and punctual performance of all other obligations of the Issuers to the
Holders or the Trustee, all in accordance with the terms set forth in
Article Ten of the Indenture, and (b) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.

     

    The
obligations of the Guarantors to the Holders and to the Trustee pursuant to this
Guarantee and the Indenture are expressly set forth in Article Ten of the
Indenture, and reference is hereby made to the Indenture for the precise terms
and limitations of this Guarantee.  Each Holder of the Note to which
this Guarantee is endorsed, by accepting such Note, agrees to and shall be bound
by such provisions.

     

     

    [Signatures
on Following Pages]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be signed
by a duly authorized officer.

     

    

    
      	 
      	
              ASHTON
      ATLANTA RESIDENTIAL, L.L.C.

            	 
      
	 
      	
              CANYON
      REALTY L.L.C.

            	 
      
	 
      	
              ASHTON
      DALLAS RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      HOUSTON RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      WOODS CORPORATE, LLC

            	 
      
	 
      	
              ASHTON
      ORLANDO RESIDENTIAL L.L.C.

            	 
      
	 
      	
              ASHTON
      BURDEN, LLC

            	 
      
	 
      	
              ASHTON
      WOODS ARIZONA L.L.C.

            	 
      
	 
      	
              ASHTON
      TAMPA RESIDENTIAL, LLC

            	 
      
	 
      	
              ASHTON
      DENVER RESIDENTIAL, LLC

            	 
      
	 
      	
              ASHTON
      WOODS LAKESIDE L.L.C.

            	 
      
	 
      	
              ASHTON
      WOODS TRANSPORTATION, LLC

            	 
      
	 	 	 
	 	 	 
	 
      	
              By:

            	 	 
      
	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	
              Title:

            	 
      	 
      
	 	 	 	 	 
	 	 	 	 	 
	 
      	
              ASHTON
      WOODS CONSTRUCTION, LLC

            	 
      
	 	 	 
	 	 	 
	 
      	
              By:
      ASHTON WOODS ARIZONA L.L.C., sole member

            
	 	 
	 	 
	 
      	
              By:

            	 	 
      
	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	
              Title:

            	 
      	 
      
	 	 	 	 	 
	 	 	 	 	 
	 
      	ASHTON
      WOODS ORLANDO LIMITED PARTNERSHIP
	 	 	 
	 	 	 
	 
      	By:
      ASHTON WOODS LAKESIDE L.L.C., general partner
	 	 
	 	 
	 
      	
              By:

            	 	 
      
	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	
              Title:

            	 
      	 
      

    

     

    

      [Rule
144A Note Guarantee Signature Page]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              ASHTON
      BROOKSTONE, INC.

            	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	
               

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

     

     

     

    [Rule 144A Note Guarantee
Signature Page]

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