Document:

Exhibit 4.4

 

 

 

 

MERITAGE HOMES CORPORATION,

 

THE GUARANTORS

named herein

 

and

 

WELLS FARGO BANK, National Association, as Trustee

 

 

INDENTURE

 

Dated as of March 10, 2005

 

 

61⁄4% Senior Notes due 2015

 

 

 

 

CROSS-REFERENCE TABLE

 

	
  TIA

  Section

  	
   

  	
   

  	
  Indenture

  Section

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
   

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
   

  	
  7.08; 7.10;
  12.02

  
	
   

  	
  (b)(1)

  	
   

  	
   

  	
  7.10

  
	
   

  	
  (c)

  	
   

  	
   

  	
  N.A.

  
	
  311

  	
  (a)

  	
   

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
   

  	
  N.A.

  
	
  312

  	
  (a)

  	
   

  	
   

  	
  2.06

  
	
   

  	
  (b)

  	
   

  	
   

  	
  12.03

  
	
   

  	
  (c)

  	
   

  	
   

  	
  12.03

  
	
  313

  	
  (a)

  	
   

  	
   

  	
  7.06

  
	
   

  	
  (b)(1)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
   

  	
   

  	
  7.06

  
	
   

  	
  (c)

  	
   

  	
   

  	
  7.06; 12.02

  
	
   

  	
  (d)

  	
   

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
   

  	
  4.02; 4.04;
  12.02

  
	
   

  	
  (b)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
   

  	
   

  	
  12.04

  
	
   

  	
  (c)(2)

  	
   

  	
   

  	
  12.04

  
	
   

  	
  (c)(3)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (d)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
   

  	
  12.05

  
	
   

  	
  (f)

  	
   

  	
   

  	
  N.A.

  
	
  315

  	
  (a)

  	
   

  	
   

  	
  7.01(b)

  
	
   

  	
  (b)

  	
   

  	
   

  	
  7.05; 12.02

  
	
   

  	
  (c)

  	
   

  	
   

  	
  7.01(a)

  
	
   

  	
  (d)

  	
   

  	
   

  	
  7.01(c)

  
	
   

  	
  (e)

  	
   

  	
   

  	
  6.12

  
	
  316

  	
  (a) (last
  sentence)

  	
   

  	
   

  	
  2.10

  
	
   

  	
  (a)(1)(A)

  	
   

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
   

  	
  6.08

  
	
   

  	
  (c)

  	
   

  	
   

  	
  8.04

  
	
  317

  	
  (a)(1)

  	
   

  	
   

  	
  6.09

  
	
   

  	
  (a)(2)

  	
   

  	
   

  	
  6.10

  
	
   

  	
  (b)

  	
   

  	
   

  	
  2.05; 7.12

  
	
  318

  	
  (a)

  	
   

  	
   

  	
  12.01

  

 

N.A. means Not Applicable

Note:                   This
Cross-Reference Table shall not, for any purpose, be deemed to be a part of the
Indenture

 

 

	
  TABLE OF CONTENTS

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  ONE

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.01.

  	
  Definitions.

  	
   

  
	
  SECTION 1.02.

  	
  Other Definitions.

  	
   

  
	
  SECTION 1.03.

  	
  Incorporation by Reference of Trust
  Indenture Act.

  	
   

  
	
  SECTION 1.04.

  	
  Rules of Construction.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO

  	
   

  
	
   

  	
   

  	
   

  
	
  THE NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Amount of Notes.

  	
   

  
	
  SECTION 2.02.

  	
  Form and Dating.

  	
   

  
	
  SECTION 2.03.

  	
  Execution and Authentication.

  	
   

  
	
  SECTION 2.04.

  	
  Registrar and Paying Agent.

  	
   

  
	
  SECTION 2.05.

  	
  Paying Agent To Hold Money in Trust.

  	
   

  
	
  SECTION 2.06.

  	
  Holder Lists.

  	
   

  
	
  SECTION 2.07.

  	
  Transfer and Exchange.

  	
   

  
	
  SECTION 2.08.

  	
  Replacement Notes.

  	
   

  
	
  SECTION 2.09.

  	
  Outstanding Notes.

  	
   

  
	
  SECTION 2.10.

  	
  Treasury Notes.

  	
   

  
	
  SECTION 2.11.

  	
  Temporary Notes.

  	
   

  
	
  SECTION 2.12.

  	
  Cancellation.

  	
   

  
	
  SECTION 2.13.

  	
  Defaulted Interest.

  	
   

  
	
  SECTION 2.14.

  	
  CUSIP Number.

  	
   

  
	
  SECTION 2.15.

  	
  Deposit of Moneys.

  	
   

  
	
  SECTION 2.16.

  	
  Book-Entry Provisions for Global Notes.

  	
   

  
	
  SECTION 2.17.

  	
  Special Transfer Provisions.

  	
   

  
	
  SECTION 2.18.

  	
  Computation of Interest.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  THREE

  	
   

  
	
   

  	
   

  	
   

  
	
  REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Election To Redeem; Notices to Trustee.

  	
   

  
	
  SECTION 3.02.

  	
  Selection by Trustee of Notes To Be
  Redeemed.

  	
   

  
	
  SECTION 3.03.

  	
  Notice of Redemption.

  	
   

  
	
  SECTION 3.04.

  	
  Effect of Notice of Redemption.

  	
   

  
	
  SECTION 3.05.

  	
  Deposit of Redemption Price.

  	
   

  

 

i

 

	
  SECTION 3.06.

  	
  Notes Redeemed in Part.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR

  	
   

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Payment of Notes.

  	
   

  
	
  SECTION 4.02.

  	
  Reports to Holders.

  	
   

  
	
  SECTION 4.03.

  	
  Waiver of Stay, Extension or Usury Laws.

  	
   

  
	
  SECTION 4.04.

  	
  Compliance Certificate.

  	
   

  
	
  SECTION 4.05.

  	
  Taxes.

  	
   

  
	
  SECTION 4.06.

  	
  Limitations on Additional Indebtedness.

  	
   

  
	
  SECTION 4.07.

  	
  Intentionally Omitted.

  	
   

  
	
  SECTION 4.08.

  	
  Limitations on Restricted Payments.

  	
   

  
	
  SECTION 4.09.

  	
  Limitations on Asset Sales.

  	
   

  
	
  SECTION 4.10.

  	
  Limitations on Transactions with
  Affiliates.

  	
   

  
	
  SECTION 4.11.

  	
  Limitations on Liens.

  	
   

  
	
  SECTION 4.12.

  	
  Conduct of Business.

  	
   

  
	
  SECTION 4.13.

  	
  Additional Note Guarantees.

  	
   

  
	
  SECTION 4.14.

  	
  Limitations on Dividend and Other
  Restrictions Affecting Restricted Subsidiaries.

  	
   

  
	
  SECTION 4.15.

  	
  Limitations on Designation of Unrestricted
  Subsidiaries.

  	
   

  
	
  SECTION 4.16.

  	
  [Intentionally Omitted]

  	
   

  
	
  SECTION 4.17.

  	
  Maintenance of Properties; Insurance;
  Compliance with Law.

  	
   

  
	
  SECTION 4.18.

  	
  Payments for Consent.

  	
   

  
	
  SECTION 4.19.

  	
  Legal Existence.

  	
   

  
	
  SECTION 4.20.

  	
  Change of Control Offer.

  	
   

  
	
  SECTION 4.21.

  	
  Suspension Period.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE

  	
   

  
	
   

  	
   

  	
   

  
	
  SUCCESSOR CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Limitations on Mergers, Consolidations,
  Etc.

  	
   

  
	
  SECTION 5.02.

  	
  Successor Person Substituted.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Events of Default.

  	
   

  
	
  SECTION 6.02.

  	
  Acceleration.

  	
   

  
	
  SECTION 6.03.

  	
  Other Remedies.

  	
   

  

 

ii

 

	
  SECTION 6.04.

  	
  Waiver of Past Defaults and Events of
  Default.

  	
   

  
	
  SECTION 6.05.

  	
  Control by Majority.

  	
   

  
	
  SECTION 6.06.

  	
  Limitation on Suits.

  	
   

  
	
  SECTION 6.07.

  	
  No Personal Liability of Directors,
  Officers, Employees and Stockholders.

  	
   

  
	
  SECTION 6.08.

  	
  Rights of Holders To Receive Payment.

  	
   

  
	
  SECTION 6.09.

  	
  Collection Suit by Trustee.

  	
   

  
	
  SECTION 6.10.

  	
  Trustee May File Proofs of Claim.

  	
   

  
	
  SECTION 6.11.

  	
  Priorities.

  	
   

  
	
  SECTION 6.12.

  	
  Undertaking for Costs.

  	
   

  
	
  SECTION 6.13.

  	
  Restoration of Rights and Remedies.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  SEVEN

  	
   

  
	
   

  	
   

  	
   

  
	
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Duties of Trustee.

  	
   

  
	
  SECTION 7.02.

  	
  Rights of Trustee.

  	
   

  
	
  SECTION 7.03.

  	
  Individual Rights of Trustee.

  	
   

  
	
  SECTION 7.04.

  	
  Trustee’s Disclaimer.

  	
   

  
	
  SECTION 7.05.

  	
  Notice of Defaults.

  	
   

  
	
  SECTION 7.06.

  	
  Reports by Trustee to Holders.

  	
   

  
	
  SECTION 7.07.

  	
  Compensation and Indemnity.

  	
   

  
	
  SECTION 7.08.

  	
  Replacement of Trustee.

  	
   

  
	
  SECTION 7.09.

  	
  Successor Trustee by Consolidation, Merger,
  etc.

  	
   

  
	
  SECTION 7.10.

  	
  Eligibility; Disqualification.

  	
   

  
	
  SECTION 7.11.

  	
  Preferential Collection of Claims Against
  Issuer.

  	
   

  
	
  SECTION 7.12.

  	
  Paying Agents.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  EIGHT

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  Without Consent of Holders.

  	
   

  
	
  SECTION 8.02.

  	
  With Consent of Holders.

  	
   

  
	
  SECTION 8.03.

  	
  Compliance with Trust Indenture Act.

  	
   

  
	
  SECTION 8.04.

  	
  Revocation and Effect of Consents.

  	
   

  
	
  SECTION 8.05.

  	
  Notation on or Exchange of Notes.

  	
   

  
	
  SECTION 8.06.

  	
  Trustee To Sign Amendments, etc.

  	
   

  

 

iii

 

	
  ARTICLE NINE

  	
   

  
	
   

  	
   

  	
   

  
	
  DISCHARGE OF INDENTURE; DEFEASANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Discharge of Indenture.

  	
   

  
	
  SECTION 9.02.

  	
  Legal Defeasance.

  	
   

  
	
  SECTION 9.03.

  	
  Covenant Defeasance.

  	
   

  
	
  SECTION 9.04.

  	
  Conditions to Defeasance or Covenant
  Defeasance.

  	
   

  
	
  SECTION 9.05.

  	
  Deposited Money and U.S. Government
  Obligations To Be Held in Trust; Other Miscellaneous Provisions.

  	
   

  
	
  SECTION 9.06.

  	
  Reinstatement.

  	
   

  
	
  SECTION 9.07.

  	
  Moneys Held by Paying Agent.

  	
   

  
	
  SECTION 9.08.

  	
  Moneys Held by Trustee.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTEE OF NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  10.01.

  	
  Guarantee.

  	
   

  
	
  SECTION
  10.02.

  	
  Execution
  and Delivery of Guarantee.

  	
   

  
	
  SECTION
  10.03.

  	
  Limitation
  of Guarantee.

  	
   

  
	
  SECTION
  10.04.

  	
  Release
  of Guarantor.

  	
   

  
	
  SECTION
  10.05.

  	
  Waiver
  of Subrogation.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  ELEVEN

  	
   

  
	
   

  	
   

  	
   

  
	
  [INTENTIONALLY OMITTED]

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  TWELVE

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.01.

  	
  Trust
  Indenture Act Controls.

  	
   

  
	
  SECTION
  12.02.

  	
  Notices.

  	
   

  
	
  SECTION
  12.03.

  	
  Communications
  by Holders with Other Holders.

  	
   

  
	
  SECTION
  12.04.

  	
  Certificate
  and Opinion as to Conditions Precedent.

  	
   

  
	
  SECTION
  12.05.

  	
  Statements
  Required in Certificate and Opinion.

  	
   

  
	
  SECTION
  12.06.

  	
  Rules
  by Trustee and Agents.

  	
   

  
	
  SECTION
  12.07.

  	
  Business
  Days; Legal Holidays.

  	
   

  
	
  SECTION
  12.08.

  	
  Governing
  Law.

  	
   

  
	
  SECTION
  12.09.

  	
  No
  Adverse Interpretation of Other Agreements.

  	
   

  
	
  SECTION
  12.10.

  	
  No
  Recourse Against Others.

  	
   

  
	
  SECTION
  12.11.

  	
  Successors.

  	
   

  

 

iv

 

	
  SECTION
  12.12.

  	
  Multiple
  Counterparts.

  	
   

  
	
  SECTION
  12.13.

  	
  Table
  of Contents, Headings, etc.

  	
   

  
	
  SECTION
  12.14.

  	
  Separability.

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  A.

  	
  Form
  of Note

  	
   

  
	
  Exhibit
  B.

  	
  Form
  of Legend for Rule 144A Notes and Other Notes That Are Restricted Notes

  	
   

  
	
  Exhibit
  C.

  	
  Form
  of Legend for Regulation S Note

  	
   

  
	
  Exhibit
  D.

  	
  Form
  of Legend for Global Note

  	
   

  
	
  Exhibit
  E.

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

  	
   

  
	
  Exhibit
  F.

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

  	
   

  
	
  Exhibit
  G.

  	
  Form
  of Guarantee

  	
   

  

 

v

 

INDENTURE, dated as of March 10, 2005,
among MERITAGE HOMES CORPORATION, a Maryland corporation, as issuer (the “Issuer”), the Guarantors (as hereinafter
defined) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Trustee”).

 

Each party agrees as follows for the benefit
of the other parties and for the equal and ratable benefit of the Holders.

 

ARTICLE ONE

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

SECTION 1.01.                                                         Definitions.

 

“Acquired Indebtedness” means (1) with
respect to any Person that becomes a Restricted Subsidiary after the Issue
Date, Indebtedness of such Person and its Subsidiaries existing at the time
such Person becomes a Restricted Subsidiary that was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary and
(2) with respect to the Issuer or any Restricted Subsidiary, any Indebtedness
of a Person (other than the Issuer or a Restricted Subsidiary) existing at the
time such Person is merged with or into the Issuer or a Restricted Subsidiary,
or Indebtedness expressly assumed by the Issuer or any Restricted Subsidiary in
connection with the acquisition of an asset or assets from another Person,
which Indebtedness was not, in any case, incurred by such other Person in
connection with, or in contemplation of, such merger or acquisition.

 

“Additional Notes” shall mean an
unlimited principal amount of Notes having identical terms and conditions to
the Notes issued pursuant to Article Two and in compliance with Section 4.06.

 

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

 

“Affiliate” of any Person means any
other Person which directly or indirectly controls or is controlled by, or is
under direct or indirect common control with, the referent Person.

 

 

For purposes of
Section 4.10, Affiliates shall be deemed to include, with respect to any
Person, any other Person (1) which beneficially owns or holds, directly or
indirectly, 10% or more of any class of the Voting Stock of the referent
Person, (2) of which 10% or more of the Voting Stock is beneficially owned
or held, directly or indirectly, by the referent Person or (3) with respect
to an individual, any immediate family member of such Person.  For purposes of this definition, “control” of a Person shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.

 

“Agent” means any Registrar, Paying
Agent or agent for service or notices and demands.

 

“amend” means to amend, supplement,
restate, amend and restate or otherwise modify; and “amendment” shall have a correlative meaning.

 

“asset”
means any asset or property.

 

“Asset Acquisition” means

 

(1)                                  an
Investment by the Issuer or any Restricted Subsidiary of the Issuer in any
other Person if, as a result of such Investment, such Person shall become a Restricted
Subsidiary of the Issuer, or shall be merged with or into the Issuer or any Restricted
Subsidiary of the Issuer, or

 

(2)                                  the
acquisition by the Issuer or any Restricted Subsidiary of the Issuer of all or
substantially all of the assets of any other Person or any division or line of
business of any other Person.

 

“Asset Sale” means any sale, issuance,
conveyance, transfer, lease, assignment or other disposition by the Issuer or
any Restricted Subsidiary to any Person other than the Issuer or any Restricted
Subsidiary (including by means of a Sale and Leaseback Transaction or a merger
or consolidation) (collectively, for purposes of this definition, a “transfer”), in one transaction or a series of
related transactions, of any assets (including Equity Interests) of the Issuer or
any of its Restricted Subsidiaries other than in the ordinary course of
business.  For purposes of this
definition, the term “Asset Sale” shall not include:

 

(1)                                  transfers
of cash or Cash Equivalents;

 

(2)                                  transfers
of assets (including Equity Interests) that are governed by, and made in
accordance with, Section 5.01;

 

(3)                                  Permitted
Investments and Restricted Payments permitted under Section 4.08;

 

2

 

(4)                                  the
creation or realization of any Permitted Lien;

 

(5)                                  transactions
in the ordinary course of business, including, without limitation, sales
(directly or indirectly), dedications and other donations to governmental authorities,
leases and sales and leasebacks of (A) homes, improved land and unimproved land
and (B) real estate (including related amenities and improvements);

 

(6)                                  dispositions
of mortgage loans and related assets and mortgage-backed securities in the
ordinary course of a mortgage lending business; and

 

(7)                                  any
transfer or series of related transfers that, but for this clause, would be
Asset Sales, if after giving effect to such transfers, the aggregate Fair
Market Value of the assets transferred in such transaction or any such series
of related transactions does not exceed $1.0 million.

 

“Attributable Indebtedness”, when used
with respect to any Sale and Leaseback Transaction, means, as at the time of determination,
the present value (discounted at a rate equivalent to the Issuer’s then-current
weighted average cost of funds for borrowed money as at the time of
determination, compounded on a semi-annual basis) of the total obligations of
the lessee for rental payments during the remaining term of any Capitalized
Lease included in any such Sale and Leaseback Transaction.

 

“Bankruptcy Event” means the
commencement of any case under the Bankruptcy Code (Title 11 of the United
States Code) or the commencement of any other bankruptcy, reorganization,
receivership, or similar proceeding under any federal, state or foreign law or
by or against any Person for whom the Company or a Restricted Subsidiary has executed
a Springing Guarantee for the benefit of such Person; provided, however,
that the filing of an involuntary case against such Person shall only be a
Bankruptcy Event if:  (i) such involuntary
case is filed in whole or in part by the Company or a Restricted Subsidiary,
any member in such Person which is an affiliate of the Company or a Restricted
Subsidiary, or any other affiliate of the Company or a Restricted Subsidiary,
or (ii) the Company or a Restricted Subsidiary, any member in such Person
which is an affiliate of the Company or a Restricted Subsidiary, or any other
affiliate of the Company or a Restricted Subsidiary shall in any way induce or
participate in the filing, whether directly or indirectly, of an involuntary
bankruptcy case against such Person or any other Person, and such involuntary
case or proceeding is not dismissed with prejudice within 120 days of the
filing thereof.

 

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

 

“Board of Directors” means, with
respect to any Person, the board of directors or comparable governing body of
such Person.

 

3

 

“Board Resolution” means a copy of a
resolution certified pursuant to an Officers’ Certificate to have been duly
adopted by the Board of Directors of the Issuer and to be in full force and
effect, and delivered to the Trustee.

 

“Borrowing Base” means, at any time of
determination, the sum of the following without duplication:

 

(1)                                  100%
of all cash and Cash Equivalents held by the Issuer or any Restricted
Subsidiary;

 

(2)                                  75%
of the book value of Developed Land for which no construction has occurred;

 

(3)                                  95%
of the cost of the land and construction costs including capitalized interest
(as reasonably allocated by the Issuer) for all Units for which there is an executed
purchase contract with a buyer not Affiliated with the Issuer, less any
deposits, down payments or earnest money;

 

(4)                                  80%
of the cost of the land and construction costs including capitalized interest
(as reasonably allocated by the Issuer) for all Units for which construction
has begun and for which there is not an executed purchase agreement with a
buyer not Affiliated with the Issuer; and

 

(5)                                  50%
of the costs of Entitled Land (other than Developed Land) on which improvements
have not commenced, less mortgage Indebtedness (other than under a Credit Facility)
applicable to such land.

 

“Business Day” means a day other than
a Saturday, Sunday or other day on which banking institutions in New York are
authorized or required by law to close.

 

“Capitalized Lease” means a lease
required to be capitalized for financial reporting purposes in accordance with
GAAP.

 

“Capitalized Lease Obligations” of any
Person means the obligations of such Person to pay rent or other amounts under
a Capitalized Lease, and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.

 

“Cash Equivalents” means:

 

(1)                                  marketable
obligations with a maturity of 360 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or instrumentality
thereof;

 

4

 

(2)                                  demand
and time deposits and certificates of deposit or acceptances with a maturity of
180 days or less of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $500 million and is assigned at least a “B” rating by Thomson
Financial BankWatch;

 

(3)                                  commercial
paper maturing no more than 180 days from the date of creation thereof issued
by a corporation that is not the Issuer or an Affiliate of the Issuer, and is
organized under the laws of any state of the United States of America or the District
of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s;

 

(4)                                  repurchase
obligations with a term of not more than ten days for underlying securities of
the types described in clause (1) above entered into with any commercial bank
meeting the specifications of clause (2) above; and

 

(5)                                  investments
in money market or other mutual funds substantially all of whose assets
comprise securities of the types described in clauses (1) through (4) above.

 

“Change of Control” means the
occurrence of any of the following events:

 

(1)                                  any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that for purposes of this clause that person or group shall be deemed to have “beneficial
ownership” of all securities that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of Voting Stock representing more
than 50% of the voting power of the total outstanding Voting Stock of the Issuer;

 

(2)                                  during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Issuer (together with any new
directors whose election to such Board of Directors or whose nomination for
election by the stockholders of the Issuer was approved by a vote of the
majority of the directors of the Issuer then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Issuer;

 

(3)                                  (a)
all or substantially all of the assets of the Issuer and the Restricted
Subsidiaries are sold or otherwise transferred to any Person other than a
Wholly-Owned Restricted Subsidiary or one or more Permitted Holders or (b) the
Issuer consolidates or merges with or into another Person other than a
Permitted Holder or any Person other than a Permitted Holder consolidates or
merges with or into the Issuer, in either case under this clause (3), in one
transaction or a series of related transactions in which immediately

 

5

 

after the
consummation thereof Persons owning Voting Stock representing in the aggregate
100% of the total voting power of the Voting Stock of the Issuer immediately
prior to such consummation do not own Voting Stock representing a majority of
the total voting power of the Voting Stock of the Issuer or the surviving or
transferee Person; or

 

(4)                                  the
Issuer shall adopt a plan of liquidation or dissolution or any such plan shall
be approved by the stockholders of the Issuer.

 

“Change of Control Triggering Event”
means the occurrence of both a Change of Control and a Rating Decline.

 

“Consolidated Amortization Expense”
for any period means the amortization expense of the Issuer and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.

 

“Consolidated Cash Flow Available for
Fixed Charges” for any period means, without duplication, the sum of the
amounts for such period of

 

(1)                                  Consolidated
Net Income, plus

 

(2)                                  in
each case only to the extent (and in the same proportion) deducted in
determining Consolidated Net Income and with respect to the portion of Consolidated
Net Income attributable to any Restricted Subsidiary only if a corresponding
amount would be permitted at the date of determination to be distributed to the
Issuer by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Restricted Subsidiary or its stockholders,

 

(a)                                  Consolidated
Income Tax Expense,

 

(b)                                 Consolidated
Amortization Expense (but only to the extent not included in Consolidated Interest
Expense),

 

(c)                                  Consolidated
Depreciation Expense,

 

(d)                                 Consolidated
Interest Expense and interest and other charges amortized to cost of home sales
and cost of land sales, and

 

(e)                                  all
other non-cash items reducing the Consolidated Net Income (excluding any
non-cash charge that results in an accrual of a reserve for cash charges in any
future period) for such period,

 

in each case
determined on a consolidated basis in accordance with GAAP, minus

 

6

 

(3)                                  the
aggregate amount of all non-cash items, determined on a consolidated basis, to
the extent such items increased Consolidated Net Income for such period.

 

“Consolidated Depreciation Expense”
for any period means the depreciation expense of the Issuer and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.

 

“Consolidated Fixed Charge Coverage Ratio”
means the ratio of Consolidated Cash Flow Available for Fixed Charges during
the most recent four consecutive full fiscal quarters for which financial
statements are available (the “Four-Quarter Period”) ending on or prior
to the date of the transaction giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio (the “Transaction Date”) to Consolidated
Interest Incurred for the Four-Quarter Period. 
For purposes of this definition, Consolidated Cash Flow Available for
Fixed Charges and Consolidated Interest Incurred shall be calculated after
giving effect on a pro forma basis for the period of such calculation to:

 

(1)                                  the
incurrence of any Indebtedness or the issuance of any Preferred Stock of the
Issuer or any Restricted Subsidiary (and the application of the proceeds
thereof) and any repayment of other Indebtedness or redemption of other Preferred
Stock (and the application of the proceeds therefrom) (other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to any revolving credit arrangement)
occurring during the Four-Quarter Period or at any time subsequent to the last
day of the Four-Quarter Period and on or prior to the Transaction Date, as if
such incurrence, repayment, issuance or redemption, as the case may be (and the
application of the proceeds thereof), occurred on the first day of the
Four-Quarter Period; and

 

(2)                                  any
Asset Sale or Asset Acquisition (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Issuer or any Restricted Subsidiary (including any Person who becomes a Restricted
Subsidiary as a result of such Asset Acquisition) incurring Acquired Indebtedness
and also including any Consolidated Cash Flow Available for Fixed Charges
(including any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Exchange Act) associated with any such
Asset Acquisition) occurring during the Four-Quarter Period or at any time
subsequent to the last day of the Four-Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition or other
disposition (including the incurrence of, or assumption or liability for, any
such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four-Quarter Period.

 

If the Issuer or any Restricted Subsidiary
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if the Issuer or such Restricted Subsidiary had directly incurred or otherwise
assumed such guaranteed Indebtedness.

 

7

 

In calculating Consolidated Interest Incurred
for purposes of determining the denominator (but not the numerator) of the
Consolidated Fixed Charge Coverage Ratio:

 

(1)                                  interest
on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on this Indebtedness in effect on the Transaction Date;

 

(2)                                  if
interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the interest
rate in effect on the Transaction Date will be deemed to have been in effect
during the Four-Quarter Period; and

 

(3)                                  notwithstanding
clause (1) or (2) above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements with a term of at
least one year after the Transaction Date relating to Hedging Obligations,
shall be deemed to accrue at the rate per annum resulting after giving effect
to the operation of these agreements.

 

“Consolidated Income Tax Expense” for
any period means the provision for taxes of the Issuer and the Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Indebtedness” means, as
of any date, the total Indebtedness of the Issuer and the Restricted Subsidiaries
as of such date, determined on a consolidated basis.

 

“Consolidated Interest Expense” for
any period means the sum, without duplication, of the total interest expense
(other than interest and other charges amortized to cost of home sales and cost
of land sales) of the Issuer and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP and including,
without duplication,

 

(1)                                  imputed
interest on Capitalized Lease Obligations and Attributable Indebtedness,

 

(2)                                  commissions,
discounts and other fees and charges owed with respect to letters of credit
securing financial obligations, bankers’ acceptance financing and receivables
financings,

 

(3)                                  the
net costs associated with Hedging Obligations,

 

(4)                                  amortization
of debt issuance costs, debt discount or premium and other financing fees and
expenses,

 

8

 

(5)                                  the
interest portion of any deferred payment obligations,

 

(6)                                  all
other non-cash interest expense,

 

(7)                                  the
product of (a) all dividend payments on any series of Disqualified Equity
Interests of the Issuer or any Preferred Stock of any Restricted Subsidiary
(other than any such Disqualified Equity Interests or any Preferred Stock held
by the Issuer or a Wholly-Owned Restricted Subsidiary), multiplied by (b) a fraction, the numerator of which is one and
the denominator of which is one minus the
then current combined federal, state and local statutory tax rate of the Issuer
and the Restricted Subsidiaries, expressed as a decimal,

 

(8)                                  all
interest payable with respect to discontinued operations, and

 

(9)                                  all
interest on any Indebtedness of any other Person guaranteed by the Issuer or
any Restricted Subsidiary.

 

“Consolidated Interest Incurred” for
any period means the sum, without duplication, of (1) Consolidated
Interest Expense and (2) interest capitalized for such period (including
interest capitalized with respect to discontinued operations but not including
interest or other charges amortized to cost of home sales and cost of land
sales).

 

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

 

(1)                                  the
net income (or loss) of any Person (other than a Restricted Subsidiary) in
which any Person other than the Issuer and the Restricted Subsidiaries has an
ownership interest, except to the extent that cash in an amount equal to any
such income has actually been received by the Issuer or any of its Restricted
Subsidiaries during such period;

 

(2)                                  except
to the extent includible in the consolidated net income of the Issuer pursuant
to the foregoing clause (1), the net income (or loss) of any Person that
accrued prior to the date that (a) such Person becomes a Restricted Subsidiary
or is merged into or consolidated with the Issuer or any Restricted Subsidiary
or (b) the assets of such Person are acquired by the Issuer or any Restricted
Subsidiary;

 

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

 

9

 

(4)                                  for
the purposes of calculating the Restricted Payments Basket only, in the case of
a successor to the Issuer by consolidation, merger or transfer of its assets,
any income (or loss) of the successor prior to such merger, consolidation or
transfer of assets;

 

(5)                                  other
than for purposes of calculating the Restricted Payments Basket, any gain (or
loss), together with any related provisions for taxes on any such gain (or the
tax effect of any such loss), realized during such period by the Issuer or any
Restricted Subsidiary upon (a) the acquisition of any securities, or the
extinguishment of any Indebtedness, of the Issuer or any Restricted Subsidiary
or (b) any Asset Sale by the Issuer or any Restricted Subsidiary; and

 

(6)                                  other
than for purposes of calculating the Restricted Payments Basket, any
extraordinary gain (or extraordinary loss), together with any related provision
for taxes on any such extraordinary gain (or the tax effect of any such extraordinary
loss), realized by the Issuer or any Restricted Subsidiary during such period.

 

In addition, any return of capital with
respect to an Investment that increased the Restricted Payments Basket pursuant
to clause (3)(d) of the first paragraph of Section 4.08 or decreased the
amount of Investments outstanding pursuant to clause (14) of the definition of “Permitted
Investments” shall be excluded from Consolidated Net Income for purposes of
calculating the Restricted Payments Basket.

 

“Consolidated Net Worth” means, with
respect to any Person as of any date, the consolidated stockholders’ equity of
such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) (1) any
amounts thereof attributable to Disqualified Equity Interests of such Person or
its Subsidiaries or any amount attributable to Unrestricted Subsidiaries and
(2) all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within twelve months after the acquisition of such business) subsequent to the
Issue Date in the book value of any asset owned by such Person or a Subsidiary
of such Person.

 

“Consolidated Tangible Assets” means,
as of any date, the total amount of assets of the Issuer and the Restricted Subsidiaries
on a consolidated basis at the end of the fiscal quarter immediately preceding
such date, as determined in accordance with GAAP, less (1) Intangible
Assets and (2) any assets securing Non-Recourse Indebtedness.

 

“Consolidated Tangible Net Worth”
means, with respect to any Person as of any date, the Consolidated Net Worth of
such Person as of such date less (without
duplication) all Intangible Assets of such Person as of such date.

 

“Corporate Trust Office” means the
office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the date of

 

10

 

execution is located at Wells
Fargo Bank, National Association, Corporate Trust Department, 707 Wilshire
Boulevard, 17th Floor, Los Angeles, California 90017.

 

“Credit Facilities” means the Credit Agreement,
dated as of December 12, 2002, as amended, among the Issuer, Guaranty Bank, as
administrative agent and swingline lender, Bank One, NA, as syndication agent,
Fleet National Bank, as documentation agent, and the other lenders party
thereto, including any notes, guarantees, collateral and security documents,
instruments and agreements executed in connection therewith (including Hedging
Obligations related to the Indebtedness incurred thereunder), and in each case
as amended or refinanced from time to time, including any agreement extending
the maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of borrowings or other Indebtedness outstanding or
available to be borrowed thereunder) all or any portion of the Indebtedness
under such agreements, and any successor or replacement agreement or agreements
with the same or any other agents, creditor, lender or group of creditors or
lenders.

 

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

 

“Default” means (1) any Event of
Default or (2) any event, act or condition that, after notice or the passage
of time or both, would be an Event of Default.

 

“Depository” means, with respect to
the Notes issued in the form of one or more Global Notes, The Depository Trust
Company or another Person designated as Depository by the Issuer, which Person
must be a clearing agency registered under the Exchange Act.

 

“Designation”
has the meaning given to this term in Section 4.15.

 

“Designation Amount” has the meaning
given to this term in Section 4.15.

 

“Developed Land” means all Entitled
Land of the Issuer and its Restricted Subsidiaries which is undergoing active
development or is ready for vertical construction.

 

“Disposition” means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person’s assets.

 

“Disqualified Equity Interests” of any
Person means any Equity Interests of such Person that, by their terms, or by
the terms of any related agreement or of any security into which they are
convertible, puttable or exchangeable, are, or upon the happening of any event
or the passage of time would be, required to be redeemed by such Person,
whether or not at the option of the holder thereof, or mature or are
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in
whole or in part, on or prior to the date which is 91 days after the final

 

11

 

maturity date of the Notes; provided, however,
that any class of Equity Interests of such Person that, by its terms,
authorizes such Person to satisfy in full its obligations with respect to the
payment of dividends or upon maturity, redemption (pursuant to a sinking fund
or otherwise) or repurchase thereof or otherwise by the delivery of Equity
Interests that are not Disqualified Equity Interests, and that are not
convertible, puttable or exchangeable for Disqualified Equity Interests or
Indebtedness, will not be deemed to be Disqualified Equity Interests so long as
such Person satisfies its obligations with respect thereto solely by the
delivery of Equity Interests that are not Disqualified Equity Interests; provided, further, however, that any Equity Interests that would
not constitute Disqualified Equity Interests but for provisions thereof giving
holders thereof (or the holders of any security into or for which such Equity
Interests are convertible, exchangeable or exercisable) the right to require
the Issuer to redeem such Equity Interests upon the occurrence of a change in
control occurring prior to the final maturity date of the Notes shall not
constitute Disqualified Equity Interests if the change in control provisions
applicable to such Equity Interests are no more favorable to such holders than
the provisions of Section 4.20 and such Equity Interests specifically
provide that the Issuer will not redeem any such Equity Interests pursuant to
such provisions prior to the Issuer’s purchase of the Notes as required
pursuant to the provisions of Section 4.20.

 

“Entitled Land” means all land of the
Issuer and its Restricted Subsidiaries (a) on which Units may be constructed or
which may be utilized for commercial, retail or industrial uses, in each case,
under applicable laws and regulations and (b) the intended use by the Issuer
for which is permissible under the applicable regional plan, development
agreement or applicable zoning ordinance.

 

“Equity Interests” of any Person means
(1) any and all shares or other equity interests (including common stock,
preferred stock, limited liability company interests and partnership interests)
in such Person and (2) all rights to purchase, warrants or options
(whether or not currently exercisable), participations or other equivalents of
or interests in (however designated) such shares or other interests in such
Person.

 

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

 

“Exchange Notes” has the meaning
provided in the Registration Rights Agreement.

 

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

 

12

 

“Financing Documents” means this
Indenture, the Registration Rights Agreement, the Notes and the Guarantees.

 

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

 

“guarantee” means a direct or indirect
guarantee by any Person of any Indebtedness of any other Person and includes
any obligation, direct or indirect, contingent or otherwise, of such
Person:  (1) to purchase or pay (or
advance or supply funds for the purchase or payment of) Indebtedness of such
other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm’s-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise); or (2) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part).  “guarantee,” when used as a verb, and “guaranteed” have correlative meanings.

 

“Guarantors”
means each Restricted Subsidiary of the Issuer on the Issue Date, and each
other Person that is required to become a Guarantor by the terms of this Indenture
after the Issue Date, in each case, until such Person is released from its Note
Guarantee.

 

“Hedging Obligations” of any Person
means the obligations of such Person pursuant to (1) any interest rate
swap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect such Person against fluctuations in interest
rates, (2) agreements or arrangements designed to protect such Person
against fluctuations in foreign currency exchange rates in the conduct of its
operations, or (3) any forward contract, commodity swap agreement, commodity
option agreement or other similar agreement or arrangement designed to protect
such Person against fluctuations in commodity prices, in each case entered into
in the ordinary course of business for bona fide hedging purposes and not for
the purpose of speculation.

 

“Holder” means any registered holder,
from time to time, of the Notes.

 

“incur” means, with respect to any
Indebtedness or Obligation, incur, create, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to such Indebtedness or Obligation; provided
that (1) the Indebtedness of a Person existing at the time such Person became a
Restricted Subsidiary or at the time such Person merged with or into the Issuer
or a Restricted Subsidiary shall be deemed to have been incurred at such time
and (2) neither the accrual of interest nor the accretion of original
issue discount shall be deemed to be an incurrence of Indebtedness.

 

13

 

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

 

(1)                                  all
liabilities, contingent or otherwise, of such Person for borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof);

 

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

 

(3)                                  all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto);

 

(4)                                  all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, except trade payables and accrued expenses incurred by
such Person in the ordinary course of business in connection with obtaining
goods, materials or services;

 

(5)                                  the
maximum fixed redemption or repurchase price of all Disqualified Equity
Interests of such Person;

 

(6)                                  all
Capitalized Lease Obligations of such Person;

 

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

 

(8)                                  all
Indebtedness of others guaranteed by such Person to the extent of such guarantee;
provided that (i) Indebtedness of the
Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s
Subsidiaries shall be counted only once in the calculation of the amount of
Indebtedness of the Issuer and its Subsidiaries on a consolidated basis and
(ii) that a Springing Guarantee shall not be deemed to be Indebtedness
under this clause (8) until the earliest to occur of (a) the demand by a
lender for payment under such Springing Guarantee, (b) the occurrence or
failure to occur of any event, act or circumstance that, with or without the
giving of notice and/or passage of time, entitles a lender to make a demand for
payment thereunder or (c) a Bankruptcy Event;

 

(9)                                  all
Attributable Indebtedness;

 

(10)                            to the
extent not otherwise included in this definition, Hedging Obligations of such
Person;

 

(11)                            all
obligations of such Person under conditional sale or other title retention
agreements relating to assets purchased by such Person; and

 

14

 

(12)                            the
liquidation value of Preferred Stock of a Subsidiary of such Person issued and
outstanding and held by any Person other than such Person (or one of its
Wholly-Owned Restricted Subsidiaries).

 

Notwithstanding the foregoing,
(a) earn-outs or similar profit sharing arrangements provided for in
acquisition agreements which are determined on the basis of future operating
earnings or other similar performance criteria (which are not determinable at
the time of acquisition) of the acquired assets or entities and
(b) accrued expenses, trade payables, model home leases (to the extent
similar in structure to the model home leases in existence on the Issue Date), customer
deposits or deferred income taxes arising in the ordinary course of business
shall not be considered Indebtedness. 
Any Indebtedness which is incurred at a discount to the principal amount
at maturity thereof shall be deemed to have been incurred in the amount of the
full principal amount at maturity thereof. 
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above, the maximum liability of such Person for any such contingent obligations
at such date and, in the case of clause (7), the lesser of (a) the Fair
Market Value of any asset subject to a Lien securing the Indebtedness of others
on the date that the Lien attaches and (b) the amount of the Indebtedness
secured.  For purposes of clause (5), the
“maximum fixed redemption or repurchase price” of any Disqualified Equity
Interests that do not have a fixed redemption or repurchase price shall be
calculated in accordance with the terms of such Disqualified Equity Interests
as if such Disqualified Equity Interests were redeemed on any date on which an
amount of Indebtedness outstanding shall be required to be determined pursuant
to this Indenture.

 

Notwithstanding the above, this Indenture
does not restrict any Unrestricted Subsidiary from incurring Indebtedness nor
will Indebtedness of any Unrestricted Subsidiaries be included in the
Consolidated Fixed Charge Coverage Ratio or the ratio of Consolidated
Indebtedness to Consolidated Tangible Net Worth hereunder, as long as the Unrestricted
Subsidiary incurring such Indebtedness remains an Unrestricted Subsidiary.

 

“Indenture” means this Indenture as
amended, restated or supplemented from time to time.

 

“Independent Director” means a
director of the Issuer who

 

(1)                                  is
independent with respect to the transaction at issue;

 

(2)                                  does
not have any material financial interest in the Issuer or any of its Affiliates
(other than as a result of holding securities of the Issuer); and

 

(3)                                  has
not and whose Affiliates or affiliated firm has not, at any time during the
twelve months prior to the taking of any action hereunder, directly or
indirectly, received, or entered into any understanding or agreement to
receive, compensation, payment or other benefit, of any type or form, from the
Issuer or any of its Affiliates in excess

 

15

 

of $60,000,
other than customary directors’ fees for serving on the Board of Directors of
the Issuer or any Affiliate and reimbursement of out-of-pocket expenses for
attendance at the Issuer’s or Affiliate’s board and board committee meetings.

 

“Independent Financial Advisor” means
an accounting, appraisal or investment banking firm of nationally recognized
standing that is, in the reasonable judgment of the Issuer’s Board of
Directors, qualified to perform the task for which it has been engaged and disinterested
and independent with respect to the Issuer and its Affiliates; provided, however,
that the prior rendering of service to the Issuer or an Affiliate of the Issuer
shall not, by itself, disqualify the advisor.

 

“Initial Purchasers” means UBS
Securities LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

 

“Institutional Accredited Investor”
means an institution that is an “accredited investor” as that term is defined
in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities Act.

 

“Intangible Assets” means, with
respect to any Person, all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
write-ups of assets over their carrying value (other than write-ups which
occurred prior to the Measurement Date and other than, in connection with the
acquisition of an asset, the write-up of the value of such asset to its Fair
Market Value in accordance with GAAP on the date of acquisition) and all other
items which would be treated as intangibles on the consolidated balance sheet
of such Person prepared in accordance with GAAP.

 

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

 

“Interest Payment Dates” means each March 15
and September 15, commencing September 15, 2005.

 

“Investment Grade Rating” means
(1) with respect to S&P, any of the rating categories from and
including AAA to and including BBB- and (2) with respect to Moody’s, any
of the rating categories from and including Aaa to and including Baa3.

 

“Investments” of any Person means:

 

(1)                                  all
direct or indirect investments by such Person in any other Person in the form
of loans, advances or capital contributions or other credit extensions constituting
Indebtedness of such other Person, and any guarantee of Indebtedness of any
other Person; provided that a Springing Guarantee shall not be deemed to
be a guarantee of Indebtedness under clause (1) of this definition until the
earliest to occur of (a) a demand by

 

16

 

a lender for
payment under such Springing Guarantee, (b) the occurrence or failure to
occur of any event, act or circumstance that, with or without the giving of
notice and/or passage of time, entitles a lender to make a demand for payment
thereunder or (c) a Bankruptcy Event;

 

(2)                                  all
purchases (or other acquisitions for consideration) by such Person of
Indebtedness, Equity Interests or other securities of any other Person;

 

(3)                                  all
other items that would be classified as investments on a balance sheet of such
Person prepared in accordance with GAAP; and

 

(4)                                  the
Designation of any Subsidiary as an Unrestricted Subsidiary.

 

Except as
otherwise expressly specified in this definition, the amount of any Investment
(other than an Investment made in cash) shall be the Fair Market Value thereof
on the date such Investment is made.  The
amount of Investment pursuant to clause (4) shall be the Designation Amount
determined in accordance with Section 4.15.  If the Issuer or any Subsidiary sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
such that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary, the Issuer shall be deemed to have made an Investment on
the date of any such sale or other disposition equal to the Fair Market Value
of the Equity Interests of and all other Investments in such Subsidiary not
sold or disposed of, which amount shall be determined by the Board of Directors
of the Issuer.  Notwithstanding the
foregoing, redemptions of Equity Interests of the Issuer shall be deemed not to
be Investments.

 

“Issue Date” means March 10, 2005.

 

“Issuer” means the party named as such
in the first paragraph of this Indenture until a successor replaces such party
pursuant to Article Five and thereafter means the successor.

 

“Issuer Request” means any written
request signed in the name of the Issuer by the Chairman of the Board of Directors,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer or the Treasurer of the Issuer and attested to by the
Secretary or any Assistant Secretary of the Issuer.

 

“Lien” means, with respect to any
asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease,
easement, restriction, covenant, charge, security interest or other encumbrance
of any kind or nature in respect of such asset, whether or not filed, recorded
or otherwise perfected under applicable law, including any conditional sale or
other title retention agreement, and any lease in the nature thereof, any
option or other agreement to sell, and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction (other than cautionary filings in respect of operating
leases).

 

17

 

“Liquidated Damages” has the meaning
set forth in the Registration Rights Agreement.

 

“Measurement Date” means May 30, 2001.

 

“Moody’s” means Moody’s Investors
Service, Inc., and its successors.

 

“Net Available Proceeds” means, with
respect to any Asset Sale, the proceeds thereof in the form of cash or Cash
Equivalents, net of

 

(1)                                  brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel, accountants and investment banks) of such Asset Sale;

 

(2)                                  provisions
for taxes payable as a result of such Asset Sale (after taking into account any
available tax credits or deductions and any tax sharing arrangements);

 

(3)                                  amounts
required to be paid to any Person (other than the Issuer or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset
Sale or having a Lien thereon;

 

(4)                                  payments
of unassumed liabilities (not constituting Indebtedness) relating to the assets
sold at the time of, or within 30 days after the date of, such Asset Sale; and

 

(5)                                  appropriate
amounts to be provided by the Issuer or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the Issuer or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including pensions and
other postemployment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an Officers’ Certificate delivered to the
Trustee; provided, however, that any amounts remaining after adjustments, revaluations
or liquidations of such reserves shall constitute Net Available Proceeds.

 

“Non-Recourse Indebtedness” with
respect to any Person means Indebtedness of such Person for which (1) the
sole legal recourse for collection of principal and interest on such Indebtedness
is against the specific property identified in the instruments evidencing or
securing such Indebtedness and such property was acquired with the proceeds of
such Indebtedness or such Indebtedness was incurred within 90 days after the
acquisition of such property and (2) no other assets of such Person may be
realized upon in collection of principal or interest on such Indebtedness.

 

“Non-U.S. Person” means a Person who
is not a U.S. person, as defined in Regulation S.

 

18

 

“Notes” means the 61⁄4% Senior Notes due
2015 issued by the Issuer, including, without limitation, the Private Exchange
Notes, if any, and the Exchange Notes, treated as a single class of securities,
as amended from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.

 

“Obligation” means any principal,
interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages
and other liabilities payable under the documentation governing any Indebtedness.

 

“Offer” has the meaning set forth in the definition of “Offer
to Purchase.”

 

“Offer Expiration Date” has the meaning set forth in the
definition of “Offer to Purchase.”

 

“Offer to Purchase” means a written
offer (the “Offer”) sent by or on behalf of the Issuer by first-class
mail, postage prepaid, to each Holder at its address appearing in the register
for the Notes on the date of the Offer offering to purchase up to the principal
amount of Notes specified in such Offer at the purchase price specified in such
Offer (as determined pursuant to this Indenture).  Unless otherwise required by applicable law,
the Offer shall specify an expiration date (the “Offer Expiration Date”)
of the Offer to Purchase, which shall be not less than 30 Business Days nor
more than 60 days after the date of such Offer, and a settlement date (the “Purchase
Date”) for purchase of Notes to occur no later than three Business Days
after the Offer Expiration Date.  The
Offer shall contain all the information required by applicable law to be
included therein.  The Offer shall also
contain information concerning the business of the Issuer and its Subsidiaries
which the Issuer in good faith believes will enable such Holders to make an informed
decision with respect to the Offer to Purchase. 
Such information shall include, at a minimum, (i) the most recent annual
and quarterly financial statements and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” contained in the document
required to be delivered to Holders pursuant to Section 4.02 (which
requirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments in the Issuer’s business
subsequent to the date of the latest of such financial statements referred to
in clause (i) (including a description of the events requiring the Issuer to
make the Offer to Purchase), (iii) if applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events requiring
the Issuer to make the Offer to Purchase and (iv) any other information
required by applicable law to be included therein.  The Offer shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Offer
to Purchase.  The Offer shall also state:

 

(1)                                  the
Section of this Indenture pursuant to which the Offer to Purchase is being
made;

 

(2)                                  the
Offer Expiration Date and the Purchase Date;

 

19

 

(3)                                  the
aggregate principal amount of the outstanding Notes offered to be purchased by
the Issuer pursuant to the Offer to Purchase (including, if less than 100%, the
manner by which such amount has been determined pursuant to the Section of this
Indenture requiring the Offer to Purchase) (the “Purchase Amount”);

 

(4)                                  the
purchase price to be paid by the Issuer for each $1,000 aggregate principal
amount of Notes accepted for payment (the “Purchase Price”);

 

(5)                                  that
the Holder may tender all or any portion of the Notes registered in the name of
such Holder and that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount;

 

(6)                                  the
place or places where Notes are to be surrendered for tender pursuant to the
Offer to Purchase;

 

(7)                                  that
interest on any Note not tendered or tendered but not purchased by the Issuer
pursuant to the Offer to Purchase will continue to accrue;

 

(8)                                  that
on the Purchase Date the Purchase Price will become due and payable upon each
Note being accepted for payment pursuant to the Offer to Purchase and that interest
thereon shall cease to accrue on and after the Purchase Date;

 

(9)                                  that
each Holder electing to tender all or any portion of a Note pursuant to the
Offer to Purchase will be required to surrender such Note, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Note
completed, at the place or places specified in the Offer prior to the close of
business on the Offer Expiration Date (such Note being, if the Issuer so
requires, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Issuer duly executed by, the Holder thereof or its
attorney duly authorized in writing);

 

(10)                            that
Holders will be entitled to withdraw all or any portion of Notes tendered if
the Issuer receives, not later than the close of business on the fifth Business
Day preceding the Offer Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder tendered, the certificate number of the Note the
holder tendered and a statement that such Holder is withdrawing all or a
portion of its tender;

 

(11)                            that
(a) if Notes in an aggregate principal amount less than or equal to the Purchase
Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase,
the Issuer shall purchase all such Notes and (b) if Notes in an aggregate principal
amount in excess of the Purchase Amount are tendered and not withdrawn pursuant
to the Offer to Purchase, the Issuer shall purchase Notes having an aggregate
principal amount equal to the Purchase Amount on a pro  rata basis
(with such adjustments as may be deemed

 

20

 

appropriate so
that only Notes in denominations of $1,000 principal amount or integral multiples
thereof shall be purchased); and

 

(12)                            that
in the case of any Holder whose Note is purchased only in part, the Issuer
shall execute and deliver to the Holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder,
in an aggregate principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered.

 

An Offer to Purchase shall be governed by and
effected in accordance with the provisions above pertaining to any Offer.

 

On or before the Purchase Date, the Issuer
shall (i) accept for payment Notes or portions thereof tendered and not
withdrawn pursuant to the Offer, (ii) deposit with the Trustee U.S.
Dollars sufficient to pay the Purchase Price, plus accrued interest, if any, of
all Notes to be purchased and (iii) deliver to the Trustee Notes so
accepted together with an Officers’ Certificate stating the Notes or portions
thereof being purchased by the Issuer. 
The Trustee shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the Purchase Price, plus accrued interest, if
any, thereon.

 

“Offering” means the offering of the
Notes as described in the Offering Memorandum.

 

“Offering Memorandum” means the
Offering Memorandum dated February 24, 2005 pursuant to which the Notes were
offered.

 

“Officer” means any of the following
of the Issuer:  the Chairman of the Board
of Directors, the Chief Executive Officer, the Chief Financial Officer, the
President, any Vice President, the Treasurer, the Secretary, the Controller or
the Chief Accounting Officer.

 

“Officers’ Certificate” means a
certificate signed by two Officers.

 

“Opinion of Counsel” means a written
opinion reasonably satisfactory in form and substance to the Trustee from legal
counsel, which counsel is reasonably acceptable to the Trustee, stating the
matters required by Section 12.05 and delivered to the Trustee.

 

“Pari Passu Indebtedness” means any
Indebtedness of the Issuer or any Guarantor that ranks pari passu as to payment
with the Notes or the Note Guarantees, as applicable.

 

“Permitted Business” means the
businesses engaged in by the Issuer and its Subsidiaries on the Issue Date as
described in the Offering Memorandum and businesses that are reasonably related
thereto or reasonable extensions thereof (including, without limitation, land
development, home alarm, pest control, title and other ancillary businesses).

 

21

 

“Permitted Holders” means Steven J.
Hilton and John R. Landon, their respective wives and children, any
corporation, limited liability company or partnership in which either of them
has voting control and is the direct and beneficial owner of a majority of the
Equity Interests and any trust for the benefit of either of them or their wives
or children.

 

“Permitted Investment” means:

 

(1)                                  Investments
by the Issuer or any Restricted Subsidiary in (a) any Restricted
Subsidiary or (b) any Person that is or will become immediately after such
Investment a Restricted Subsidiary or that will merge or consolidate into the
Issuer or a Restricted Subsidiary;

 

(2)                                  Investments
in the Issuer by any Restricted Subsidiary;

 

(3)                                  loans
and advances to directors, employees and officers of the Issuer and the
Restricted Subsidiaries for bona fide business purposes and to purchase Equity
Interests of the Issuer not in excess of $2.0 million at any one time outstanding;

 

(4)                                  Hedging
Obligations incurred pursuant to clause (4) of the second paragraph of
Section 4.06;

 

(5)                                  Cash
Equivalents;

 

(6)                                  receivables
owing to the Issuer or any Restricted Subsidiary if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include such concessionary trade
terms as the Issuer or any such Restricted Subsidiary deems reasonable under
the circumstances;

 

(7)                                  Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;

 

(8)                                  Investments
made by the Issuer or any Restricted Subsidiary as a result of consideration
received in connection with an Asset Sale made in compliance with Section 4.09;

 

(9)                                  lease,
utility and other similar deposits in the ordinary course of business;

 

(10)                            Investments
made by the Issuer or a Restricted Subsidiary for consideration consisting only
of Qualified Equity Interests of the Issuer;

 

22

 

(11)                            stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Issuer or any Restricted Subsidiary
or in satisfaction of judgments;

 

(12)                            Investments
in existence on the Issue Date or any Reversion Date;

 

(13)                            Investments
made by the Issuer or any Restricted Subsidiary in joint ventures in a
Permitted Business with unaffiliated third parties in an aggregate amount at
any one time outstanding not to exceed 30% of the Issuer’s Consolidated
Tangible Net Worth at such time (with each Investment being valued as of the
date made and without regard to subsequent changes in value); and

 

(14)                            other
Investments in an aggregate amount not to exceed $25.0 million at any one time
outstanding (with each Investment being valued as of the date made and without
regard to subsequent changes in value).

 

The amount of Investments outstanding at any
time pursuant to clause (14) above shall be deemed to be reduced:

 

(a)                                  upon
the disposition or repayment of or return on any Investment made pursuant to
clause (14) above, by an amount equal to the return of capital with respect to
such Investment to the Issuer or any Restricted Subsidiary (to the extent not
included in the computation of Consolidated Net Income), less the cost
of the disposition of such Investment and net of taxes; and

 

(b)                                 upon
a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an
amount equal to the lesser of (x) the Fair Market Value of the Issuer’s proportionate
interest in such Subsidiary immediately following such Redesignation, and (y)
the aggregate amount of Investments in such Subsidiary that increased (and did
not previously decrease) the amount of Investments outstanding pursuant to
clause (14) above.

 

“Permitted Liens” means the following
types of Liens:

 

(1)                                  (a) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business and (b) Liens for taxes, assessments or governmental
charges or claims, in either case, for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made in respect thereof;

 

(2)                                  Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety and appeal

 

23

 

bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);

 

(3)                                  Liens
upon specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

 

(4)                                  Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other assets relating to such letters of credit
and products and proceeds thereof;

 

(5)                                  Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements of the Issuer or any
Restricted Subsidiary, including rights of offset and setoff;

 

(6)                                  bankers’
Liens, rights of setoff and other similar Liens existing solely with respect to
cash and Cash Equivalents on deposit in one or more accounts maintained by the
Issuer or any Restricted Subsidiary, in each case granted in the ordinary
course of business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash management
and operating account arrangements, including those involving pooled accounts
and netting arrangements; provided that in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness;

 

(7)                                  leases
or subleases (or any Liens related thereto) granted to others that do not
materially interfere with the ordinary course of business of the Issuer or any
Restricted Subsidiary;

 

(8)                                  Liens
arising from filing Uniform Commercial Code financing statements regarding
leases;

 

(9)                                  Liens
securing all of the Notes and Liens securing any Note Guarantee;

 

(10)                            Liens
existing on the Issue Date or any Reversion Date securing Indebtedness
outstanding on the Issue Date or any Reversion Date and Liens securing
Refinancing Indebtedness with respect to Indebtedness incurred pursuant to
clause (2) of the second paragraph of Section 4.06;

 

(11)                            Liens
in favor of the Issuer or a Guarantor;

 

(12)                            Liens
securing Indebtedness under the Credit Facilities;

 

24

 

(13)                            without
limiting any other clause in this definition of “Permitted Liens,” Liens
securing Indebtedness of the Issuer or any Restricted Subsidiary permitted to
be incurred under this Indenture; provided that the aggregate amount of
all consolidated Indebtedness of the Issuer and the Restricted Subsidiaries
secured by Liens (including all Indebtedness permitted to be secured by the
other provisions of this definition, but excluding Non-Recourse Indebtedness)
shall not exceed 40% of Consolidated Tangible Assets at any one time
outstanding (after giving effect to the incurrence of such Indebtedness and the
use of the proceeds thereof);

 

(14)                            Liens
securing Non-Recourse Indebtedness of the Issuer or any Restricted Subsidiary
permitted to be incurred under this Indenture; provided that such Liens
apply only to the property financed out of the net proceeds of such
Non-Recourse Indebtedness within 90 days after the incurrence of such
Non-Recourse Indebtedness;

 

(15)                            Liens
securing Purchase Money Indebtedness permitted to be incurred under this
Indenture; provided that such Liens apply only to the property acquired,
constructed or improved with the proceeds of such Purchase Money Indebtedness
within 90 days after the incurrence of such Purchase Money Indebtedness;

 

(16)                            Liens
securing Acquired Indebtedness permitted to be incurred under this Indenture; provided
that the Liens do not extend to assets not subject to such Lien at the time of
acquisition (other than improvements thereon) and are no more favorable to the
lienholders than those securing such Acquired Indebtedness prior to the incurrence
of such Acquired Indebtedness by the Issuer or a Restricted Subsidiary;

 

(17)                            Liens
on assets of a Person existing at the time such Person is acquired or merged
with or into or consolidated with the Issuer or any such Restricted Subsidiary
(and not created in anticipation or contemplation thereof);

 

(18)                            Liens
to secure Attributable Indebtedness permitted to be incurred under this
Indenture; provided that any such Lien shall not extend to or cover any
assets of the Issuer or any Restricted Subsidiary other than the assets which
are the subject of the Sale and Leaseback Transaction in which the Attributable
Indebtedness is incurred;

 

(19)                            attachment
or judgment Liens not giving rise to a Default and which are being contested in
good faith by appropriate proceedings;

 

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

 

(21)                            zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
real property

 

25

 

in the
ordinary course of business of the Issuer and its Subsidiaries or the value of
such real property for the purpose of such business;

 

(22)                            any
option, contract or other agreement to sell an asset; provided such sale
is not otherwise prohibited under this Indenture;

 

(23)                            Liens
securing Hedging Obligations of the Issuer or any Restricted Subsidiary;

 

(24)                            any
interest or title of a lessor under any Capitalized Lease Obligation of the
Issuer or any Restricted Subsidiary; provided that such Liens do not
extend to any property or asset which is not leased property subject to such
Capitalized Lease Obligations;

 

(25)                            Liens
for the benefit of holders of defeased Indebtedness of the Company or any
Restricted Subsidiary on funds deposited in trust for the purpose of defeasing
such Indebtedness to the extent such Indebtedness is permitted to be defeased
pursuant to the terms of this Indenture; and

 

(26)                            Liens
on mortgage loans and related assets of mortgage lending Subsidiaries securing
Indebtedness incurred (i) pursuant to or (ii) during a suspension
period that would have been permitted by, clause (14) of the second paragraph
of Section 4.06.

 

“Permitted Unrestricted Subsidiary Debt”
means Indebtedness of an Unrestricted Subsidiary:

 

(1)                                  as
to which neither the Issuer nor any Restricted Subsidiary (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender;

 

(2)                                  no
default with respect to which (including any rights that the holders thereof
may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness
(other than the Notes) of the Issuer or any Restricted Subsidiary to declare a
default on the other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and

 

(3)                                  as
to which the lenders have been notified in writing that they will not have any
recourse to the Equity Interests or assets of the Issuer or any Restricted
Subsidiary.

 

26

 

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

 

“Physical Notes” means certificated
Notes in registered form in substantially the form set forth in Exhibit A.

 

“Plan of Liquidation” with respect to
any Person, means a plan that provides for, contemplates or the effectuation of
which is preceded or accompanied by (whether or not substantially
contemporaneously, in phases or otherwise): 
(1) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety; and (2) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition of all
or substantially all of the remaining assets of such Person to creditors and
holders of Equity Interests of such Person.

 

“Preferred Stock” means, with respect
to any Person, any and all preferred or preference stock or other equity
interests (however designated) of such Person whether now outstanding or issued
after the Issue Date.

 

“principal” means, with respect to the
Notes, the principal of, and premium, if any, on the Notes.

 

“Private Exchange” has the meaning set
forth in the Registration Rights Agreement.

 

“Private Exchange Notes” has the meaning
set forth in the Registration Rights Agreement.

 

“Private Placement Legend” means the
legend initially set forth on the Rule 144A Notes and Other Notes that are
Restricted Notes in the form set forth in Exhibit B.

 

“Purchase Amount” has the meaning set forth
in the definition of “Offer to Purchase.”

 

“Purchase Date” has the meaning set
forth in the definition of “Offer to Purchase.”

 

“Purchase Money Indebtedness” means
Indebtedness, including Capitalized Lease Obligations, of the Issuer or any
Restricted Subsidiary incurred for the purpose of financing all or any part of
the purchase price of property, plant or equipment used in the business of the
Issuer or any Restricted Subsidiary or the cost of installation, construction
or improvement thereof; provided, however,
that (1) the amount of such Indebtedness shall not exceed such purchase

 

27

 

price or cost, (2) such
Indebtedness shall not be secured by any asset other than the specified asset
being financed or, in the case of real property or fixtures, including
additions and improvements, the real property to which such asset is attached
and (3) such Indebtedness shall be incurred within 90 days after such
acquisition of such asset by the Issuer or such Restricted Subsidiary or such
installation, construction or improvement.

 

“Purchase Price” has the meaning set
forth in the definition of “Offer to Purchase.”

 

“Qualified Equity Interests” means
Equity Interests of the Issuer other than Disqualified Equity Interests; provided
that such Equity Interests shall not be deemed Qualified Equity Interests to
the extent sold or owed to a Subsidiary of the Issuer or financed, directly or
indirectly, using funds (1) borrowed from the Issuer or any Subsidiary of the
Issuer until and to the extent such borrowing is repaid or (2) contributed,
extended, guaranteed or advanced by the Issuer or any Subsidiary of the Issuer
(including, without limitation, in respect of any employee stock ownership or
benefit plan).

 

“Qualified Equity Offering” means the
issuance and sale of Qualified Equity Interests of the Issuer to Persons other
than any Permitted Holder or any other Person who is not, prior to such issuance
and sale, an Affiliate of the Issuer.

 

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

 

“Rating Agency” means each of
(a) S&P and (b) Moody’s.

 

“Rating Category” means:

 

(1)                                  with
respect to S&P, any of the following categories:  BB, B, CCC, CC, C and D (or equivalent
successor categories); and

 

(2)                                  with
respect to Moody’s, any of the following categories:  Ba, B, Caa, Ca, C and D (or equivalent
successor categories).

 

In determining
whether the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; or 1, 2 and 3 for Moody’s) will
be taken into account (e.g., with respect to S&P a decline in rating from
BB+ to BB, as well as from BB- to B+, will constitute a decrease of one
gradation).

 

“Rating Date” means the date which is
90 days prior to the earlier of (1) a Change of Control and
(2) public notice of the occurrence of a Change of Control or of the
intention by the Issuer to effect a Change of Control.

 

28

 

“Rating Decline” means the decrease
(as compared with the Rating Date) by one or more gradations within Rating
Categories as well as between Rating Categories of the rating of the Notes by a
Rating Agency on, or within 120 days after, the earlier of the date of public notice
of the occurrence of a Change of Control or of the intention by the Issuer to
effect a Change of Control (which period will be extended for so long as the
rating of the Notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies).

 

“Receivables” means an amount owed
with respect to completed sales of housing units, lots and parcels sold to an
unaffiliated purchaser.

 

“redeem” means to redeem, repurchase,
purchase, defease, retire, discharge or otherwise acquire or retire for value;
and “redemption” shall have a correlative meaning.

 

“Redemption Date” when used with
respect to any Note to be redeemed means the date fixed for such redemption
pursuant to the terms of the Notes.

 

“refinance” means to refinance, repay,
prepay, replace, renew or refund.

 

“Refinancing Indebtedness” means
Indebtedness of the Issuer or a Restricted Subsidiary issued in exchange for,
or the proceeds from the issuance and sale or disbursement of which are used
substantially concurrently to redeem or refinance in whole or in part, or
constituting an amendment of, any Indebtedness of the Issuer or any Restricted
Subsidiary (the “Refinanced Indebtedness”) in a principal amount not in
excess of the principal amount of the Refinanced Indebtedness so repaid or
amended (plus the amount of any premium paid and the amount of reasonable
expenses incurred by the Issuer or any Restricted Subsidiary in connection with
such repayment or amendment) (or, if such Refinancing Indebtedness refinances
Indebtedness under a revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment not to exceed
the maximum commitment under such revolving credit facility or other
agreement); provided that:

 

(1)                                  if
the Refinanced Indebtedness was subordinated to or pari passu with the Notes or
the Note Guarantees, as the case may be, then such Refinancing Indebtedness, by
its terms, is expressly pari passu with (in the case of Refinanced Indebtedness
that was pari passu with) or subordinate in right of payment to (in the case of
Refinanced Indebtedness that was subordinated to) the Notes or the Note
Guarantees, as the case may be, at least to the same extent as the Refinanced
Indebtedness;

 

(2)                                  the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Refinanced Indebtedness being repaid or amended or (b) after the maturity date
of the Notes;

 

(3)                                  the
portion, if any, of the Refinancing Indebtedness that is scheduled to mature on
or prior to the maturity date of the Notes has a Weighted Average Life to Maturity

 

29

 

at the time
such Refinancing Indebtedness is incurred that is equal to or greater than the
Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness
being repaid that is scheduled to mature on or prior to the maturity date of
the Notes; and

 

(4)                                  the
Refinancing Indebtedness is secured only to the extent, if at all, and by the
assets, that the Refinanced Indebtedness being repaid, extended or amended is secured.

 

“Registration Rights Agreement” means
the registration rights agreement dated as of the Issue Date among the Issuer,
the Guarantors and the Initial Purchasers.

 

“Regulation S” means Regulation S
promulgated under the Securities Act.

 

“Responsible Officer” when used with
respect to the Trustee, means an officer or assistant officer assigned to the
corporate trust department of the Trustee (or any successor group of the
Trustee) with direct responsibility for the administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

 

“Restricted Note” has the same meaning
as “Restricted Security” set forth in Rule 144(a)(3) promulgated under the
Securities Act; provided, that the Trustee shall be entitled to request
and conclusively rely upon an Opinion of Counsel with respect to whether any Note
is a Restricted Note.

 

“Restricted Payment” means any of the
following:

 

(1)                                  the
declaration or payment of any dividend or any other distribution on Equity
Interests of the Issuer or any Restricted Subsidiary or any payment made to the
direct or indirect holders (in their capacities as such) of Equity Interests of
the Issuer or any Restricted Subsidiary, including, without limitation, any
payment in connection with any merger or consolidation involving the Issuer,
but excluding (a) dividends or distributions payable solely in Qualified
Equity Interests and (b) in the case of Restricted Subsidiaries, dividends
or distributions payable to the Issuer or to a Restricted Subsidiary and pro
rata dividends or distributions payable to minority stockholders of any
Restricted Subsidiary;

 

(2)                                  the
redemption of any Equity Interests of the Issuer or any Restricted Subsidiary,
including, without limitation, any payment in connection with any merger or consolidation
involving the Issuer, but excluding any such Equity Interests held by the
Issuer or any Restricted Subsidiary;

 

(3)                                  any
Investment other than a Permitted Investment; or

 

30

 

(4)                                  any
redemption prior to the scheduled maturity or prior to any scheduled repayment of
principal or sinking fund payment, as the case may be, in respect of Subordinated
Indebtedness.

 

“Restricted Payments Basket” has the
meaning given to such term in clause (3) of the first paragraph of
Section 4.08.

 

“Restricted Subsidiary” means any Subsidiary
of the Issuer other than an Unrestricted Subsidiary.

 

“Reversion Date” has the meaning given
to such term in the definition of “Suspension Period.”

 

“Rule 144” means Rule 144 promulgated
under the Securities Act.

 

“Rule 144A” means Rule 144A promulgated
under the Securities Act.

 

“S&P” means Standard & Poor’s
Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors.

 

“Sale and Leaseback Transaction”
means, with respect to any Person, an arrangement with any bank, insurance
company or other lender or investor or to which such lender or investor is a
party, providing for the leasing by such Person of any asset of such Person
which has been or is being sold or transferred by such Person to such lender or
investor or to any Person to whom funds have been or are to be advanced by such
lender or investor on the security of such asset.

 

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

 

“Secretary’s Certificate” means a
certificate signed by the Secretary of the Issuer.

 

“Securities Act” means the U.S.
Securities Act of 1933, as amended.

 

“Significant Subsidiary” means (1) any
Restricted Subsidiary that would be a “significant subsidiary” as defined in
Regulation S-X promulgated pursuant to the Securities Act as such Regulation is
in effect on the Issue Date and (2) any Restricted Subsidiary that, when aggregated
with all other Restricted Subsidiaries that are not otherwise Significant Subsidiaries
and as to which any event described in clause (7) or (8) of Section 6.01 has occurred
and is continuing, would constitute a Significant Subsidiary under clause (1)
of this definition.

 

“Springing Guarantee” means a
guarantee by a Person which by its express terms does not become effective
until the occurrence of a Bankruptcy Event.

 

31

 

“Subordinated Indebtedness” means
Indebtedness of the Issuer or any Restricted Subsidiary that is subordinated in
right of payment to the Notes or the Note Guarantees, respectively.

 

“Subsidiary” means, with respect to
any Person:

 

(1)                                  any
corporation, limited liability company, association or other business entity of
which more than 50% of the total voting power of the Equity Interests entitled
(without regard to the occurrence of any contingency) to vote in the election
of the Board of Directors thereof are at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

 

(2)                                  any
partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or of one or more Subsidiaries of such Person
(or any combination thereof).

 

Unless
otherwise specified, “Subsidiary” refers to a Subsidiary of the Issuer.

 

“Surviving Person” means, with respect
to any Person involved in or that makes any Disposition, the Person formed by
or surviving such Disposition or the Person to which such Disposition is made.

 

“Suspension Period” means the period
(a) beginning on the date that:

 

(1)                                  the
Notes have Investment Grade Ratings by both Rating Agencies; provided
that, prior to the assignment of the Investment Grade Ratings, the Issuer has advised
the Rating Agencies that the Suspendable Covenants will not apply during the Suspension
Period;

 

(2)                                  no
Default has occurred and is continuing; and

 

(3)                                  the
Issuer has delivered an Officers’ Certificate to the Trustee certifying that
the conditions set forth in clauses (1) and (2) above are satisfied;

 

and
(b) ending on the date (the “Reversion Date”) that either Rating
Agency ceases to have Investment Grade Ratings on the Notes.

 

“Trust Indenture Act” or “TIA”
means the Trust Indenture Act of 1939, as amended.

 

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

 

32

 

“Unit” means a residence, whether
single or part of a multifamily building, whether completed or under
construction, held by the Issuer or any Restricted Subsidiary for sale or
rental in the ordinary course of business; provided, however,
that the number of Units that are rental Units at the time of determination
shall not exceed 25% of the total Units sold or rented by the Issuer and its
Restricted Subsidiaries during the immediately preceding twelve month period.

 

“Unrestricted Subsidiary” means
(1) any Subsidiary that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors of the Issuer in accordance
with Section 4.15 and (2) any Subsidiary of an Unrestricted Subsidiary.

 

“U.S. Government Obligations” means
direct non-callable obligations of, or obligations guaranteed by, the United
States of America for the payment of which guarantee or obligations the full
faith and credit of the United States is pledged.

 

“Voting Stock” with respect to any
Person, means securities of any class of Equity Interests of such Person
entitling the holders thereof (whether at all times or only so long as no
senior class of stock or other relevant equity interest has voting power by
reason of any contingency) to vote in the election of members of the Board of
Directors of such Person.

 

“Weighted Average Life to Maturity”
when applied to any Indebtedness at any date, means the number of years
obtained by dividing (1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund, serial
maturity or other required payment of principal, including payment at final
maturity, in respect thereof by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment by (2) the then outstanding principal amount of such Indebtedness.

 

“Wholly-Owned Restricted Subsidiary”
means a Restricted Subsidiary of which 100% of the Equity Interests (except for
directors’ qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one stockholder,
but which interest is not in excess of what is required for such purpose) are
owned directly by the Issuer or through one or more Wholly-Owned Restricted
Subsidiaries.

 

SECTION 1.02.                                                         Other
Definitions.

 

The definitions of the following terms may be
found in the sections indicated as follows:

 

33

 

	
  Term

  	
   

  	
  Defined in Section

  
	
  “Affiliate Transaction”

  	
   

  	
  4.10

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.16

  	
  (a)

  
	
  “Business Day”

  	
   

  	
  12.07

  	
   

  
	
  “Change of Control Date”

  	
   

  	
  4.20

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.20

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.20

  	
   

  
	
  “Change of Control Purchase Price”

  	
   

  	
  4.20

  	
   

  
	
  “Company Bankruptcy Proceeding”

  	
   

  	
  11.02

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  9.03

  	
   

  
	
  “Custodian”

  	
   

  	
  6.01

  	
   

  
	
  “Designation”

  	
   

  	
  4.15

  	
  (a)

  
	
  “Events of Default”

  	
   

  	
  6.01

  	
   

  
	
  “Excess Proceeds”

  	
   

  	
  4.09

  	
   

  
	
  “Global Notes”

  	
   

  	
  2.16

  	
  (a)

  
	
  “Guarantor Bankruptcy Proceeding”

  	
   

  	
  10.07

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  9.02

  	
   

  
	
  “Legal Holiday”

  	
   

  	
  12.07

  	
   

  
	
  “Note Portion of Excess Proceeds”

  	
   

  	
  4.09

  	
   

  
	
  “Other Debt”

  	
   

  	
  4.09

  	
   

  
	
  “Other Notes”

  	
   

  	
  2.02

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.04

  	
   

  
	
  “Ratio Exception”

  	
   

  	
  4.06

  	
   

  
	
  “Redesignation”

  	
   

  	
  4.15

  	
   

  
	
  “Registrar”

  	
   

  	
  2.04

  	
   

  
	
  “Regulation S Global Notes”

  	
   

  	
  2.16

  	
  (a)

  
	
  “Regulation S Notes”

  	
   

  	
  2.02

  	
   

  
	
  “Replacement Assets

  	
   

  	
  4.09

  	
   

  
	
  “Restricted Global Note”

  	
   

  	
  2.16

  	
  (a)

  
	
  “Restricted Payment”

  	
   

  	
  4.08

  	
   

  
	
  “Revocation”

  	
   

  	
  4.15

  	
  (c)

  
	
  “Rule 144A Notes”

  	
   

  	
  2.02

  	
   

  

 

SECTION 1.03.                                                         Incorporation
by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision
of the TIA, the portion of such provision required to be incorporated herein in
order for this Indenture to be qualified under the TIA is incorporated by
reference in and made a part of this Indenture. 
The following TIA terms used in this Indenture have the following
meanings:

 

“indenture
securities” means the Notes.

 

“indenture
securityholder” means a Holder or Noteholder.

 

“indenture
to be qualified” means this Indenture.

 

“indenture
trustee” or “institutional trustee” means the Trustee.

 

34

 

“obligor on
the indenture securities” means the Issuer, the Guarantors or any other
obligor on the Notes.

 

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

 

SECTION 1.04.                                                         Rules
of Construction.

 

Unless the context otherwise requires:

 

(1)                                  a
term has the meaning assigned to it herein, whether defined expressly or by
reference;

 

(2)                                  “or”
is not exclusive;

 

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

 

(4)                                  words
used herein implying any gender shall apply to both genders;

 

(5)                                  “herein”,
“hereof” and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other Subsection;

 

(6)                                  unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial statements of
the Issuer;

 

(7)                                  “$,”
“U.S. Dollars” and “United States Dollars” each refer to United States dollars,
or such other money of the United States that at the time of payment is legal
tender for payment of public and private debts; and

 

(8)                                  whenever
in this Indenture there is mentioned, in any context, principal, interest or
any other amount payable under or with respect to any Note, such mention shall
be deemed to include mention of the payment of Additional Interest to the
extent that, in such context, Additional Interest is, was or would be payable
in respect thereof.

 

35

 

ARTICLE TWO

 

THE NOTES

 

SECTION 2.01.                                                         Amount
of Notes.

 

The Trustee shall authenticate (i) Notes
for original issue on the Issue Date in the aggregate principal amount not to
exceed $350,000,000 and (ii) subject to Section 4.06, Additional
Notes in an unlimited principal amount, upon a written order of the Issuer in
the form of an Officers’ Certificate of the Issuer.  The Officers’ Certificate shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated.

 

Upon receipt of a written order of the Issuer
in the form of an Officers’ Certificate, the Trustee shall authenticate Notes
in substitution for Notes originally issued to reflect any name change of the
Issuer.  Any Additional Notes shall be
part of the same issue as the Notes being issued on the date hereof and will
vote on all matters as one class with the Notes being issued on the date
hereof, including, without limitation, waivers, amendments, redemptions and
Offers to Purchase.  For the purposes of
this Indenture, except for Section 4.06, references to the Notes include Additional
Notes, if any.

 

Upon receipt of an Issuer Request and an
Officers’ Certificate certifying that a registration statement relating to an
exchange offer specified in the Registration Rights Agreement or any
registration rights agreement relating to the Additional Notes is effective or
that the conditions precedent to a private exchange thereunder have been met,
the Trustee shall authenticate an additional series of Notes for issuance in
exchange for the Notes tendered for exchange pursuant to such exchange offer
registered under the Securities Act or pursuant to a Private Exchange.  Exchange Notes or Private Exchange Notes may
have such distinctive series designations and such changes in the form thereof
as are specified in the Issuer Request referred to in the preceding sentence.

 

SECTION 2.02.                                                         Form
and Dating.

 

The Notes and the Trustee’s certificate of
authentication with respect thereto shall be substantially in the form set
forth in Exhibit A, which is incorporated in and forms a part of this
Indenture.  The Notes may have notations,
legends or endorsements required by law, rule or usage to which the Issuer is
subject.  Without limiting the generality
of the foregoing, Notes offered and sold to Qualified Institutional Buyers in
reliance on Rule 144A (“Rule 144A Notes”) shall bear the legend and
include the form of assignment set forth in Exhibit B, Notes offered and
sold in offshore transactions in reliance on Regulation S (“Regulation S
Notes”) shall bear the legend and include the form of assignment set forth
in Exhibit C, and Notes offered and sold to Institutional
Accredited Investors in transactions exempt from registration under the
Securities Act not made in reliance on Rule 144A or Regulation S (“Other
Notes”) may be represented by a

 

36

 

Restricted Global Note or, if
such an investor may not hold an interest in the Restricted Global Note, a
Physical Note, in each case, bearing the Private Placement Legend.  Each Note shall be dated the date of its authentication.

 

The terms and provisions contained in the
Notes shall constitute, and are expressly made, a part of this Indenture and,
to the extent applicable, the Issuer, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and agree to be bound thereby.

 

The Notes may be presented for registration
of transfer and exchange at the offices of the Registrar.

 

SECTION 2.03.                                                         Execution
and Authentication.

 

Two Officers shall sign, or one Officer shall
sign and one Officer (each of whom shall, in each case, have been duly
authorized by all requisite corporate actions) shall attest to, the Notes for
the Issuer by manual or facsimile signature.

 

If an Officer whose signature is on a Note
was an Officer at the time of such execution but no longer holds that office at
the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.

 

No Note shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears
on such Note a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder.  Notwithstanding the foregoing, if any Note
shall have been authenticated and delivered hereunder but never issued and sold
by the Issuer, and the Issuer shall deliver such Note to the Trustee for
cancellation as provided in Section 2.12, for all purposes of this
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.

 

The Trustee may appoint an authenticating
agent reasonably acceptable to the Issuer to authenticate the Notes.  Unless otherwise provided in the appointment,
an authenticating agent may authenticate the Notes whenever the Trustee may do
so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights
as an Agent to deal with the Issuer and Affiliates of the Issuer.  Each Paying Agent is designated as an
authenticating agent for purposes of this Indenture.

 

The Notes shall be issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof.

 

37

 

SECTION 2.04.                                                         Registrar
and Paying Agent.

 

The Issuer shall maintain an office or agency
(which shall be located in the Borough of Manhattan in The City of New York,
State of New York) where Notes may be presented for registration of transfer or
for exchange (the “Registrar”), and an office or agency where Notes may
be presented for payment (the “Paying Agent”) and an office or agency
where notices and demands to or upon the Issuer, if any, in respect of the
Notes and this Indenture may be served. 
The Registrar shall keep a register of the Notes and of their transfer
and exchange.  The Issuer may have one or
more additional Paying Agents.  The term “Paying
Agent” includes any additional Paying Agent. 
Neither the Issuer nor any Affiliate thereof may act as Paying Agent.

 

The Issuer shall enter into an appropriate
agency agreement, which shall incorporate the provisions of the TIA, with any
Agent that is not a party to this Indenture. 
The agreement shall implement the provisions of this Indenture that
relate to such Agent.  The Issuer shall
notify the Trustee of the name and address of any such Agent.  If the Issuer fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act
as such and shall be entitled to appropriate compensation in accordance with
Section 7.07.

 

The Issuer initially appoints the Trustee as
Registrar, Paying Agent and Agent for service of notices and demands in
connection with the Notes and this Indenture.

 

SECTION 2.05.                                                         Paying
Agent To Hold Money in Trust.

 

Each Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for
the payment of principal of or premium or interest on the Notes (whether such
money has been paid to it by the Issuer or any other obligor on the Notes or
the Guarantors), and the Issuer and the Paying Agent shall notify the Trustee
of any default by the Issuer (or any other obligor on the Notes) in making any
such payment.  Money held in trust by the
Paying Agent need not be segregated except as required by law and in no event
shall the Paying Agent be liable for any interest on any money received by it
hereunder.  The Issuer at any time may
require the Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed and the Trustee may at any time during the continuance
of any Event of Default specified in Section 6.01 (1) or (2), upon written
request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed.  Upon making such payment, the Paying Agent
shall have no further liability for the money delivered to the Trustee.

 

SECTION 2.06.                                                         Holder
Lists.

 

The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of the Holders.  If
the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at
least five Business Days before each Interest Payment Date, and at such other
times as the Trustee may request in writing, a list in such form

 

38

 

and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders.

 

SECTION 2.07.                                                         Transfer
and Exchange.

 

Subject to Sections 2.16 and 2.17, when
Notes are presented to the Registrar with a request from the Holder of such
Notes to register a transfer or to exchange them for an equal principal amount
of Notes of other authorized denominations, the Registrar shall register the
transfer as requested.  Every Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or be accompanied by a written instrument of transfer in form satisfactory
to the Issuer and the Registrar, duly executed by the Holder thereof or his
attorneys duly authorized in writing.  To
permit registrations of transfers and exchanges, the Issuer shall issue and
execute and the Trustee shall authenticate new Notes (and the Guarantors shall
execute the guarantee thereon) evidencing such transfer or exchange at the
Registrar’s request.  No service charge
shall be made to the Holder for any registration of transfer or exchange.  The Issuer may require from the Holder
payment of a sum sufficient to cover any transfer taxes or other governmental
charge that may be imposed in relation to a transfer or exchange, but this
provision shall not apply to any exchange pursuant to Section 2.11, 3.06,
4.09, 4.20 or 8.05 (in which events the Issuer shall be responsible for the
payment of such taxes).  The Registrar
shall not be required to exchange or register a transfer of any Note for a
period of 15 days immediately preceding the mailing of notice of redemption of
Notes to be redeemed or of any Note selected, called or being called for redemption
except the unredeemed portion of any Note being redeemed in part.

 

Any Holder of the Global Note shall, by
acceptance of such Global Note, agree that transfers of the beneficial
interests in such Global Note may be effected only through a book entry system
maintained by the Holder of such Global Note (or its agent), and that ownership
of a beneficial interest in the Global Note shall be required to be reflected
in a book entry.

 

Each Holder of a Note agrees to indemnify the
Issuer and the Trustee against any liability that may result from the transfer,
exchange or assignment of such Holder’s Note in violation of any provision of
this Indenture and/or applicable U.S. Federal or state securities law.

 

Except as expressly provided herein, neither
the Trustee nor the Registrar shall have any duty to monitor the Issuer’s
compliance with or have any responsibility with respect to the Issuer’s
compliance with any Federal or state securities laws.

 

SECTION 2.08.                                                         Replacement
Notes.

 

If a mutilated Note is surrendered to the
Registrar or the Trustee, or if the Holder of a Note claims that the Note has
been lost, destroyed or wrongfully taken, the Issuer shall issue and the
Trustee shall authenticate a replacement Note (and the Guarantors shall execute
the guarantee thereon) if the Holder of such Note furnishes to the Issuer and
the Trustee evidence reasonably

 

39

 

acceptable to them of the
ownership and the destruction, loss or theft of such Note and if the requirements
of Section 8-405 of the New York Uniform Commercial Code as in effect on the
date of this Indenture are met.  If
required by the Trustee or the Issuer, an indemnity bond shall be posted,
sufficient in the judgment of both to protect the Issuer, the Guarantors, the
Trustee or any Paying Agent from any loss that any of them may suffer if such
Note is replaced.  The Issuer may charge
such Holder for the Issuer’s reasonable out-of-pocket expenses in replacing
such Note and the Trustee may charge the Issuer for the Trustee’s expenses
(including, without limitation, attorneys’ fees and disbursements) in replacing
such Note.  Every replacement Note shall
constitute a contractual obligation of the Issuer.

 

SECTION 2.09.                                                         Outstanding
Notes.

 

The Notes
outstanding at any time are all Notes that have been authenticated by the
Trustee except for (a) those cancelled by it, (b) those delivered to
it for cancellation, (c) to the extent set forth in Sections 9.01 and
9.02, on or after the date on which the conditions set forth in Section 9.01 or
9.02 have been satisfied, those Notes theretofore authenticated and delivered
by the Trustee hereunder and (d) those described in this Section 2.09
as not outstanding.  Subject to
Section 2.10, a Note does not cease to be outstanding because the Issuer
or one of its Affiliates holds the Note.

 

If a Note is replaced pursuant to
Section 2.08, it ceases to be outstanding unless the Trustee receives
proof satisfactory to it that the replaced Note is held by a bona fide purchaser
in whose hands such Note is a legal, valid and binding obligation of the Issuer.

 

If the Paying Agent holds, in its capacity as
such, on any maturity date, money sufficient to pay all accrued interest and
principal with respect to the Notes payable on that date and is not prohibited
from paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Notes cease to be outstanding and interest
on them ceases to accrue.

 

SECTION 2.10.                                                         Treasury
Notes.

 

In determining whether the Holders of the
required principal amount of Notes have concurred in any declaration of
acceleration or notice of default or direction, waiver or consent or any
amendment, modification or other change to this Indenture, Notes owned by the Issuer
or any other Affiliate of the Issuer shall be disregarded as though they were
not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent
or any amendment, modification or other change to this Indenture, only Notes as
to which a Responsible Officer of the Trustee has received an Officers’
Certificate stating that such Notes are so owned shall be so disregarded.  Notes so owned which have been pledged in
good faith shall not be disregarded if the pledgee established to the satisfaction
of the Trustee the pledgee’s right so to act with respect to the Notes and that
the pledgee is not the Issuer, a Guarantor, any other obligor on the Notes or
any of their respective Affiliates.

 

40

 

SECTION 2.11.                                                         Temporary
Notes.

 

Until definitive Notes are prepared and ready
for delivery, the Issuer may prepare and the Trustee shall authenticate
temporary Notes.  Temporary Notes shall
be substantially in the form of definitive Notes but may have variations that
the Issuer considers appropriate for temporary Notes.  Without unreasonable delay, the Issuer shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes.  Until such exchange,
temporary Notes shall be entitled to the same rights, benefits and privileges
as definitive Notes.

 

SECTION 2.12.                                                         Cancellation.

 

The Issuer at any time may deliver Notes to
the Trustee for cancellation.  The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment.  The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall (subject to the record-retention requirements of the
Exchange Act) destroy cancelled Notes. 
The Issuer may not reissue or resell, or issue new Notes to replace,
Notes that the Issuer has redeemed or paid, or that have been delivered to the
Trustee for cancellation.

 

SECTION 2.13.                                                         Defaulted
Interest.

 

If the Issuer defaults on a payment of
interest on the Notes, it shall pay the defaulted interest, plus (to the extent
permitted by law) any interest payable on the defaulted interest, in accordance
with the terms hereof, to the Persons who are Holders on a subsequent special
record date, which date shall be at least five Business Days prior to the payment
date.  The Issuer shall fix such special
record date and payment date in a manner satisfactory to the Trustee.  At least 10 days before such special record
date, the Issuer shall mail to each Holder a notice that states the special
record date, the payment date and the amount of defaulted interest, and
interest payable on defaulted interest, if any, to be paid.  The Issuer may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements (if
applicable) of any securities exchange on which the Notes may be listed and,
upon such notice as may be required by such exchange, if, after written notice
given by the Issuer to the Trustee of the proposed payment pursuant to this
sentence, such manner of payment shall be deemed practicable by the Trustee.

 

SECTION 2.14.                                                         CUSIP
Number.

 

The Issuer in issuing the Notes may use a “CUSIP”
number, and if so, such CUSIP number shall be included in notices of redemption
or exchange as a convenience to Holders; provided, that any such notice
may state that no representation is made as to the correctness or accuracy of
the CUSIP number printed in the notice or on the Notes, and that reliance may
be placed only on the other identification numbers printed on the Notes.  The Issuer shall

 

41

 

promptly notify the Trustee of
any such CUSIP number used by the Issuer in connection with the issuance of the
Notes and of any change in the CUSIP number.

 

SECTION 2.15.                                                         Deposit
of Moneys.

 

Prior to 10:00 a.m., New York City time, on
each Interest Payment Date and maturity date, the Issuer shall have deposited
with the Paying Agent in immediately available funds money sufficient to make
cash payments, if any, due on such Interest Payment Date or maturity date, as
the case may be, in a timely manner which permits the Trustee to remit payment
to the Holders on such Interest Payment Date or maturity date, as the case may
be.  The principal and interest on Global
Notes shall be payable to the Depository or its nominee, as the case may be, as
the sole registered owner and the sole holder of the Global Notes represented
thereby.  The principal and interest on
Physical Notes shall be payable, either in person or by mail, at the office of
the Paying Agent.

 

SECTION 2.16.                                                         Book-Entry
Provisions for Global Notes.

 

(a)                                  Rule
144A Notes initially shall be represented by one or more notes in registered,
global form without interest coupons (collectively, the “Restricted Global
Note”).  Regulation S Notes initially
shall be represented by one or more notes in registered, global form without
interest coupons (collectively, the “Regulation S Global Note,” and,
together with the Restricted Global Note and any other global notes
representing Notes, the “Global Notes”). 
The Global Notes shall bear legends as set forth in Exhibit D.  The Global Notes initially shall (i) be registered
in the name of the Depository or the nominee of such Depository, in each case
for credit to an account of an Agent Member (or, in the case of the Regulation
S Global Notes, of Euroclear System and Cedel Bank, S.A.), (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit B with respect to Restricted Global Notes and Exhibit C
with respect to Regulation S Global Notes.

 

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

 

(b)                                 Transfers
of Global Notes shall be limited to transfer in whole, but not in part, to the
Depository, its successors or their respective nominees.  Interests of beneficial owners in the Global
Notes may be transferred or exchanged for Physical Notes in accordance with the
rules and procedures of the Depository and the provisions of Section 2.17.  In addition, a

 

42

 

Global Note shall be
exchangeable for Physical Notes if (i) the Depository (x) notifies the Issuer
that it is unwilling or unable to continue as depository for such Global Note
and the Issuer thereupon fails to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act or (ii) there
shall have occurred and be continuing an Event of Default with respect to the
Notes.  In all cases, Physical Notes
delivered in exchange for any Global Note or beneficial interests therein shall
be registered in the names, and issued in any approved denominations, requested
by or on behalf of the Depository (in accordance with its customary procedures).

 

(c)                                  In
connection with any transfer or exchange of a portion of the beneficial
interest in any Global Note to beneficial owners pursuant to paragraph (b), the
Registrar shall (if one or more Physical Notes are to be issued) reflect on its
books and records the date and a decrease in the principal amount of the Global
Note in an amount equal to the principal amount of the beneficial interest in
the Global Note to be transferred, and the Issuer shall execute, and the
Trustee shall upon receipt of a written order from the Issuer authenticate and
make available for delivery, one or more Physical Notes of like tenor and
amount.

 

(d)                                 In
connection with the transfer of Global Notes as an entirety to beneficial
owners pursuant to paragraph (b), the Global Notes shall be deemed to be
surrendered to the Trustee for cancellation, and the Issuer shall execute, and
the Trustee shall authenticate and deliver, to each beneficial owner identified
by the Depository in writing in exchange for its beneficial interest in the
Global Notes, an equal aggregate principal amount of Physical Notes of authorized
denominations.

 

(e)                                  Any
Physical Note constituting a Restricted Note delivered in exchange for an
interest in a Global Note pursuant to paragraph (b), (c) or (d) shall, except
as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.17, bear the
Private Placement Legend or, in the case of the Regulation S Global Note, the
legend set forth in Exhibit C, in each case, unless the Issuer
determines otherwise in compliance with applicable law.

 

(f)                                    On
or prior to the 40th day after the later of the commencement of the offering of
the Notes represented by the Regulation S Global Note and the issue date of
such Notes (such period through and including such 40th day, the “Restricted
Period”), a beneficial interest in a Regulation S Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
corresponding Restricted Global Note only upon receipt by the Trustee of a
written certification from the transferor to the effect that such transfer is
being made (i)(a) to a Person whom the transferor reasonably believes is a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule 144A or
(b) pursuant to another exemption from the registration requirements under the
Securities Act which is accompanied by an Opinion of Counsel regarding the
availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.

 

43

 

(g)                                 Beneficial
interests in the Restricted Global Note may be transferred to a Person who
takes delivery in the form of an interest in the Regulation S Global Note,
whether before or after the expiration of the Restricted Period, only if the
transferor first delivers to the Trustee a written certificate to the effect
that such transfer is being made in accordance with Rule 903 or 904 of Regulation
S or Rule 144 (if available).

 

(h)                                 Any
beneficial interest in one of the Global Notes that is transferred to a Person
who takes delivery in the form of an interest in another Global Note shall,
upon transfer, cease to be an interest in such Global Note and become an
interest in such other Global Note and, accordingly, shall thereafter be
subject to all transfer restrictions and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such
an interest.

 

(i)                                     The
Holder of any Global Note may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent Members,
to take any action which a Holder is entitled to take under this Indenture or
the Notes.

 

SECTION 2.17.                                                         Special
Transfer Provisions.

 

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

 

(i)                                     the
Registrar shall register the transfer of any Note constituting a Restricted
Note, whether or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after March 10, 2007 or such other date as such Note shall be
freely transferable under Rule 144 as certified in an Officers’ Certificate or
(y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in the
form of Exhibit E hereto or (2) in the case of a transfer to a Non-U.S.
Person (including a QIB), the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit F hereto; provided
that in the case of any transfer of a Note bearing the Private Placement Legend
for a Note not bearing the Private Placement Legend, the Registrar has received
an Officers’ Certificate authorizing such transfer; and

 

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

 

whereupon (a)
the Registrar shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Notes) a decrease in the
principal amount of a

 

44

 

Global Note in
an amount equal to the principal amount of the beneficial interest in a Global
Note to be transferred, and (b) the Registrar shall reflect on its books
and records the date and an increase in the principal amount of a Global Note
in an amount equal to the principal amount of the beneficial interest in the
Global Note transferred or the Issuer shall execute and the Trustee shall
authenticate and make available for delivery one or more Physical Notes of like
tenor and amount.

 

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

 

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

 

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

 

(c)                                  Private
Placement Legend.  Upon the
registration of transfer, exchange or replacement of Notes not bearing the
Private Placement Legend, the Registrar shall deliver Notes that do not bear
the Private Placement Legend.  Upon the
registration of transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) it has received the Officers’ Certificate
required by paragraph (a)(i)(y) of this Section 2.17, (ii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer
and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (iii) such Note has been sold pursuant to
an effective

 

45

 

registration statement under
the Securities Act and the Registrar has received an Officers’ Certificate from
the Issuer to such effect.

 

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

 

The Registrar shall retain for a period of
two years copies of all letters, notices and other written communications
received pursuant to Section 2.16 or this Section 2.17.  The Issuer shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable notice to the Registrar.

 

SECTION 2.18.                                                         Computation
of Interest.

 

Interest on the Notes shall be computed on
the basis of a 360-day year of twelve 30-day months.

 

ARTICLE THREE

 

REDEMPTION

 

SECTION 3.01.                                                         Election
To Redeem; Notices to Trustee.

 

If the Issuer elects to redeem Notes pursuant
to paragraph 6 of the Notes, at least 45 days prior to the Redemption Date
(unless a shorter notice shall be agreed to in writing by the Trustee) but not
more than 65 days before the Redemption Date, the Issuer shall notify the Trustee
in writing of the Redemption Date, the principal amount of Notes to be redeemed
and the redemption price, and deliver to the Trustee an Officers’ Certificate
stating that such redemption will comply with the conditions contained in
paragraph 6 of the Notes.  Notice given
to the Trustee pursuant to this Section 3.01 may not be revoked after the time
that notice is given to Holders pursuant to Section 3.03.

 

SECTION 3.02.                                                         Selection
by Trustee of Notes To Be Redeemed.

 

In the event that less than all of the Notes
are to be redeemed pursuant to a redemption made pursuant to paragraph 6
of the Notes, selection of the Notes for redemption shall be made by the
Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national security exchange, on a pro  rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000
or less shall

 

46

 

be redeemed in part.  If a partial redemption is made pursuant to
the second paragraph of paragraph 6 of the Notes, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro
rata basis or on as nearly a pro  rata basis as is
practicable (subject to the procedures of the Depository), unless that method
is otherwise prohibited.  The Trustee
shall promptly notify the Issuer of the Notes selected for redemption and, in
the case of any Notes selected for partial redemption, the principal amount
thereof to be redeemed.  The Trustee may
select for redemption portions of the principal of the Notes that have
denominations larger than $1,000.  For
all purposes of this Indenture unless the context otherwise requires,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.  The Issuer may acquire Notes by means other
than redemption, whether pursuant to an Issuer tender offer, open market
purchase or otherwise provided such
acquisition does not otherwise violate the other terms of this Indenture.

 

SECTION 3.03.                                                         Notice
of Redemption.

 

At least 30 days, and no more than 60 days,
before a Redemption Date, the Issuer shall mail, or cause to be mailed, a
notice of redemption by first-class mail to each Holder of Notes to be redeemed
at his or her last address as the same appears on the registry books maintained
by the Registrar pursuant to Section 2.04.

 

The notice shall identify the Notes to be
redeemed (including the CUSIP numbers thereof) and shall state:

 

(1)                                  the
Redemption Date;

 

(2)                                  the
redemption price and the amount of premium and accrued interest to be paid;

 

(3)                                  if
any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the Redemption Date and upon surrender of
such Note, a new Note or Notes in principal amount equal to the unredeemed
portion will be issued;

 

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

 

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

 

(6)                                  that
unless the Issuer defaults in making the redemption payment, interest on Notes
called for redemption ceases to accrue on and after the Redemption Date;

 

(7)                                  the
provision of paragraph 6 of the Notes, as the case may be, pursuant to which
the Notes called for redemption are being redeemed; and

 

47

 

(8)                                  the
aggregate principal amount of Notes that are being redeemed.

 

At the Issuer’s written request made at least
five Business Days prior to the date on which notice is to be given, the
Trustee shall give the notice of redemption in the Issuer’s name and at the
Issuer’s sole expense.

 

SECTION 3.04.                                                         Effect
of Notice of Redemption.

 

Once the notice of redemption described in
Section 3.03 is mailed, Notes called for redemption become due and payable on
the Redemption Date and at the redemption price, including any premium, plus
interest accrued to the Redemption Date. 
Upon surrender to the Paying Agent, such Notes shall be paid at the
redemption price, including any premium, plus interest accrued to the
Redemption Date, provided that if the Redemption Date is after a regular
record date and on or prior to the Interest Payment Date, the accrued interest
shall be payable to the Holder of the redeemed Notes registered on the relevant
record date, and provided, further, that if a Redemption Date is
a Legal Holiday, payment shall be made on the next succeeding Business Day and
no interest shall accrue for the period from such Redemption Date to such succeeding
Business Day.

 

SECTION 3.05.                                                         Deposit
of Redemption Price.

 

On or prior to 10:00 A.M., New York City
time, on each Redemption Date, the Issuer shall deposit with the Paying Agent
in immediately available funds money sufficient to pay the redemption price of,
including premium, if any, and accrued interest on all Notes to be redeemed on
that date other than Notes or portions thereof called for redemption on that
date which have been delivered by the Issuer to the Trustee for cancellation.

 

On and after any Redemption Date, if money
sufficient to pay the redemption price of, including premium, if any, and
accrued interest on Notes called for redemption shall have been made available
in accordance with the preceding paragraph, the Notes called for redemption
will cease to accrue interest and the only right of the Holders of such Notes
will be to receive payment of the redemption price of and, subject to the first
proviso in Section 3.04, accrued and unpaid interest on such Notes to the
Redemption Date.  If any Note surrendered
for redemption shall not be so paid, interest will be paid, from the Redemption
Date until such redemption payment is made, on the unpaid principal of the Note
and any interest not paid on such unpaid principal, in each case, at the rate
and in the manner provided in the Notes.

 

SECTION 3.06.                                                         Notes
Redeemed in Part.

 

Upon surrender of a Note that is redeemed in
part, the Trustee shall authenticate for the Holder thereof a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.

 

48

 

ARTICLE FOUR

 

COVENANTS

 

SECTION 4.01.                                                         Payment
of Notes.

 

The Issuer shall pay the principal of and
interest (including all Additional Interest as provided in the Registration
Rights Agreement) on the Notes on the dates and in the manner provided in the
Notes and this Indenture.  An installment
of principal or interest shall be considered paid on the date it is due if the
Trustee or Paying Agent holds on that date money designated for and sufficient
to pay such installment.

 

The Issuer shall pay interest on overdue
principal (including post-petition interest in a proceeding under any
Bankruptcy Law), and overdue interest, to the extent lawful, at the rate
specified in the Notes.

 

SECTION 4.02.                                                         Reports
to Holders.

 

Whether or not required by the SEC, so long
as any Notes are outstanding, the Issuer shall furnish to the Holders of Notes,
within the time periods specified in the SEC’s rules and regulations (including
any grace periods or extensions permitted by the SEC):

 

(1)                                  all
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were
required to file these Forms, including a “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and, with respect to the
annual information only, a report on the annual financial statements by the
Issuer’s independent registered public accounting firm; and

 

(2)                                  all
current reports that would be required to be filed with the SEC on Form 8-K if
the Issuer were required to file these reports.

 

In addition, whether or not required by the
SEC, the Issuer shall file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the SEC’s rules and regulations (unless
the SEC will not accept the filing) and make the information available to
securities analysts and prospective investors upon request.  For so long as any Notes remain outstanding,
the Issuer shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

49

 

SECTION 4.03.                                                         Waiver
of Stay, Extension or Usury Laws.

 

Each of the Issuer and the Guarantors
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead (as a defense or otherwise) or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive any of the Issuer
and the Guarantors from paying all or any portion of the principal of, premium,
if any, and/or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
each of the Issuer and the Guarantors hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.

 

SECTION 4.04.                                                         Compliance
Certificate.

 

(a)                                  The
Issuer shall deliver to the Trustee, within 90 days after the end of each
fiscal year, an Officers’ Certificate stating that a review of the activities
of the Issuer and its Subsidiaries during such fiscal year has been made under
the supervision of the signing Officers with a view to determining whether the
Issuer and the Guarantors have kept, observed, performed and fulfilled their
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Issuer
and the Guarantors have kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and are not in default in the performance
or observance of any of the terms, provisions and conditions hereof (or, if a
Default shall have occurred, describing all such Defaults of which he or she
may have knowledge and what action they are taking or propose to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Issuer and the
Guarantors is taking or propose to take with respect thereto.

 

(b)                                 The
Issuer and the Guarantors shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default,
an Officers’ Certificate specifying such Default and what action the Issuer and
the Guarantors are taking or propose to take with respect thereto.

 

(c)                                  The
Issuer’s fiscal year currently ends on December 31.  The Issuer will provide written notice to the
Trustee of any change in its fiscal year.

 

50

 

SECTION 4.05.                                                         Taxes.

 

The Issuer and the Guarantors shall, and
shall cause each of their Subsidiaries to, pay prior to delinquency all
material taxes, assessments, and governmental levies except as contested in
good faith and by appropriate proceedings.

 

SECTION 4.06.                                                         Limitations
on Additional Indebtedness.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Restricted
Subsidiary may incur additional Indebtedness (including Acquired Indebtedness)
if no Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of the Indebtedness and if, after giving effect
thereto, either (a) the Consolidated Fixed Charge Coverage Ratio would be
at least 2.00 to 1.00 or (b) the ratio of Consolidated Indebtedness to
Consolidated Tangible Net Worth would be less than 3.00 to 1.00 (either (a) or
(b), the “Ratio Exception”).

 

Notwithstanding the above, so long as no
Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of the following Indebtedness, each of the
following shall be permitted (the “Permitted Indebtedness”):

 

(1)                                  Indebtedness
of the Issuer and any Restricted Subsidiary under the Credit Facilities in an
aggregate amount at any time outstanding (whether incurred under the Ratio
Exception or as Permitted Indebtedness) not to exceed the greater of
(x) $600.0 million and (y) the amount of the Borrowing Base as of the
date of such incurrence;

 

(2)                                  the
Notes and the Note Guarantees issued on the Issue Date;

 

(3)                                  Indebtedness
of the Issuer and the Restricted Subsidiaries to the extent outstanding on the
Issue Date (other than Indebtedness referred to in clauses (1) and
(2) above, and after giving effect to the intended use of proceeds of the
Notes);

 

(4)                                  Indebtedness
of the Issuer and the Restricted Subsidiaries under Hedging Obligations; provided that (a) such Hedging
Obligations relate to payment obligations on Indebtedness otherwise permitted
to be incurred by this Section 4.06, and (b) the notional principal
amount of such Hedging Obligations at the time incurred does not exceed the
principal amount of the Indebtedness to which such Hedging Obligations relate;

 

(5)                                  Indebtedness
of the Issuer owed to a Restricted Subsidiary and Indebtedness of any
Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however,
that (a) any Indebtedness of the Issuer owed to a Restricted Subsidiary is
unsecured and subordinated, pursuant to a written agreement, to the Issuer’s
obligation, under this Indenture and the Notes and (b) upon any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness
being owed to any Person

 

51

 

other than the
Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as
applicable, shall be deemed to have incurred Indebtedness not permitted by this
clause (5);

 

(6)                                  Indebtedness
in respect of bid, performance or surety bonds issued for the account of the
Issuer or any Restricted Subsidiary in the ordinary course of business, including
guarantees or obligations of the Issuer or any Restricted Subsidiary with respect
to letters of credit supporting such bid, performance or surety obligations (in
each case other than for an obligation for money borrowed);

 

(7)                                  Purchase
Money Indebtedness incurred by the Issuer or any Restricted Subsidiary;

 

(8)                                  Non-Recourse
Indebtedness of the Issuer or any Restricted Subsidiary incurred for the
acquisition, development and/or improvement of real property and secured by
Liens only on such real property;

 

(9)                                  Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided, however,
that such Indebtedness is extinguished within five Business Days of incurrence;

 

(10)                            Indebtedness
arising in connection with endorsement of instruments for deposit in the
ordinary course of business;

 

(11)                            Refinancing
Indebtedness with respect to Indebtedness incurred pursuant to the Ratio
Exception or clause (2) or (3) above;

 

(12)                            Indebtedness
of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed
$25.0 million at any time outstanding;

 

(13)                            obligations
for, pledge of assets in respect of, and guarantees of, bond financings of
political subdivisions or enterprises thereof in the ordinary course of business;
and

 

(14)                            Indebtedness
of mortgage lending Subsidiaries under warehouse lines of credit, repurchase
agreements and Indebtedness secured by mortgage loans and related assets of
mortgage lending Subsidiaries in the ordinary course of a mortgage lending
business.

 

For purposes of determining compliance with
this Section 4.06, in the event that an item of Indebtedness meets the
criteria of more than one of the categories of Permitted Indebtedness described
in clauses (1) through (14) above or is entitled to be incurred pursuant to

 

52

 

the Ratio Exception, the Issuer
shall, in its sole discretion, classify such item of Indebtedness and may
divide and classify such Indebtedness in more than one of the types of
Indebtedness described, except that Indebtedness outstanding under the Credit
Facilities on the Issue Date shall be deemed to have been incurred under clause
(1) above.

 

SECTION 4.07.                                                         Intentionally
Omitted.

 

 

SECTION 4.08.                                                         Limitations
on Restricted Payments.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, make any Restricted
Payment if at the time of such Restricted Payment:

 

(1)                                  a
Default shall have occurred and be continuing or shall occur as a consequence
thereof;

 

(2)                                  the
Issuer cannot incur $1.00 of additional Indebtedness pursuant to the Ratio
Exception; or

 

(3)                                  the
amount of such Restricted Payment, when added to the aggregate amount of all other
Restricted Payments made after the Measurement Date (other than Restricted
Payments made pursuant to clause (2), (3) or (5) of the next paragraph), exceeds
the sum (the “Restricted Payments Basket”) of (without duplication):

 

(a)                                  50%
of Consolidated Net Income for the period (taken as one accounting period)
commencing on the first day of the first full fiscal quarter commencing after
the Measurement Date to and including the last day of the fiscal quarter ended
immediately prior to the date of such calculation for which consolidated
financial statements are available (or, if such Consolidated Net Income shall
be a deficit, minus 100% of such aggregate deficit), plus

 

(b)                                 100%
of the aggregate net cash proceeds or the Fair Market Value of any assets to be
used in a Permitted Business (other than securities) received by the Issuer
either (x) as contributions to the common equity of the Issuer after the
Measurement Date or (y) from the issuance and sale of Qualified Equity
Interests after the Measurement Date, other than to the extent any such
proceeds are used to redeem Notes in accordance with Section 6(b) of the
Notes, plus

 

(c)                                  the
aggregate amount by which Indebtedness of the Issuer or any Restricted
Subsidiary is reduced on the Issuer’s balance sheet upon the conversion or
exchange (other than by a Subsidiary of the Issuer) subsequent to the Measurement
Date into Qualified Equity Interests (less the amount of any cash, or the

 

53

 

fair value of
assets, distributed by the Issuer or any Restricted Subsidiary upon such
conversion or exchange), plus

 

(d)                                 in
the case of the disposition or repayment of or return on any Investment that
was treated as a Restricted Payment made after the Measurement Date, an amount
(to the extent not included in the computation of Consolidated Net Income)
equal to the lesser of (i) the return of capital with respect to such Investment
and (ii) the amount of such Investment that was treated as a Restricted
Payment, in either case, less the cost of the disposition of such Investment
and net of taxes, plus

 

(e)                                  upon
a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the
lesser of (i) the Fair Market Value of the Issuer’s proportionate interest
in such Subsidiary immediately following such Redesignation, and (ii) the
aggregate amount of the Issuer’s Investments in such Subsidiary to the extent
such Investments reduced the amount available for subsequent Restricted Payments
under this clause (3) and were not previously repaid or otherwise reduced,
plus

 

(f)                                    $25.0
million.

 

The foregoing provisions will not prohibit:

 

(1)                                  the
payment by the Issuer or any Restricted Subsidiary of any dividend within 60
days after the date of declaration thereof, if on the date of declaration the
payment would have complied with the provisions of this Indenture;

 

(2)                                  so
long as no Default shall have occurred and be continuing at the time of or as a
consequence of such redemption, the redemption of any Equity Interests of the Issuer
or any Restricted Subsidiary in exchange for, or out of the proceeds of the
substantially concurrent issuance and sale of, Qualified Equity Interests;

 

(3)                                  so
long as no Default shall have occurred and be continuing at the time of or as a
consequence of such redemption, the redemption of Subordinated Indebtedness of
the Issuer or any Restricted Subsidiary (a) in exchange for, or out of the
proceeds of the substantially concurrent issuance and sale of, Qualified Equity
Interests or (b) in exchange for, or out of the proceeds of the substantially
concurrent incurrence of, Refinancing Indebtedness permitted to be incurred
under Section 4.06 and the other terms of this Indenture;

 

(4)                                  so
long as no Default shall have occurred and be continuing at the time of or as a
consequence of such redemption, the redemption of Equity Interests of the
Issuer held by officers, directors or employees or former officers, directors
or employees (or

 

54

 

their
transferees, estates or beneficiaries under their estates), upon their death,
disability, retirement, severance or termination of employment or service; provided that the aggregate cash consideration
paid for all such redemptions shall not exceed $2.0 million during any calendar
year (with unused amounts in any calendar year being carried over to succeeding
calendar years subject to a maximum of $4.0 million in any calendar year); or

 

(5)                                  repurchases
of Equity Interests deemed to occur upon the exercise of stock options if the
Equity Interests represents a portion of the exercise price thereof;

 

provided that no issuance and sale of
Qualified Equity Interests pursuant to clause (2) or (3) above shall increase
the Restricted Payments Basket, except to the extent the proceeds thereof exceed
the amounts used to effect the transactions described therein.

 

SECTION 4.09.                                                         Limitations
on Asset Sales.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale
unless:

 

(1)                                  the
Issuer or such Restricted Subsidiary receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets included in
such Asset Sale; and

 

(2)                                  at
least 75% of the total consideration received in such Asset Sale or series of related
Asset Sales consists of cash or Cash Equivalents.

 

For purposes of clause (2), the following
shall be deemed to be cash:

 

(a)                                  the
amount (without duplication) of any Indebtedness (other than Subordinated
Indebtedness) of the Issuer or such Restricted Subsidiary that is expressly
assumed by the transferee in such Asset Sale and with respect to which the
Issuer or such Restricted Subsidiary, as the case may be, is unconditionally
released by the holder of such Indebtedness,

 

(b)                                 the
amount of any obligations received from such transferee that are within 30 days
converted by the Issuer or such Restricted Subsidiary to cash (to the extent of
the cash actually so received), and

 

(c)                                  the
Fair Market Value of any assets (other than securities, unless such securities
represent Equity Interests in an entity engaged solely in a Permitted Business,
such entity becomes a Restricted Subsidiary and the Issuer or a Restricted
Subsidiary acquires voting and management control of such entity) received by
the Issuer or any Restricted Subsidiary to be used by it in the Permitted
Business.

 

55

 

If at any time any non-cash consideration
received by the Issuer or any Restricted Subsidiary of the Issuer, as the case
may be, in connection with any Asset Sale is repaid or converted into or sold
or otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then the date of such repayment, conversion
or disposition shall be deemed to constitute the date of an Asset Sale
hereunder and the Net Available Proceeds thereof shall be applied in accordance
with this Section 4.09.

 

If the Issuer or any Restricted Subsidiary
engages in an Asset Sale, the Issuer or such Restricted Subsidiary shall, no
later than one year following the consummation thereof, apply all or any of the
Net Available Proceeds therefrom to:

 

(1)                                  repay
any Indebtedness under the Credit Facilities;

 

(2)                                  repay
any Indebtedness which was secured by the assets sold in such Asset Sale;
and/or

 

(3)                                  invest
all or any part of the Net Available Proceeds thereof in the purchase of assets
(other than securities, unless such securities represent Equity Interests in an
entity engaged solely in a Permitted Business, such entity becomes a Restricted
Subsidiary and the Issuer or a Restricted Subsidiary acquires voting and
management control of such entity) to be used by the Issuer or any Restricted
Subsidiary in the Permitted Business.

 

The amount of Net Available Proceeds not
applied or invested as provided in this paragraph will constitute “Excess
Proceeds.”

 

When the aggregate amount of Excess Proceeds
equals or exceeds $25.0 million, the Issuer shall be required to make an
Offer to Purchase from all Holders and, if applicable, redeem (or make an offer
to do so) any Pari Passu Indebtedness of the Issuer the provisions of which
require the Issuer to redeem such Indebtedness with the proceeds from any Asset
Sales (or offer to do so), in an aggregate principal amount of Notes and such
Pari Passu Indebtedness equal to the amount of such Excess Proceeds as follows:

 

(1)                                  the
Issuer shall (a) make an Offer to Purchase (a “Net Proceeds Offer”) to
all Holders, and (b) redeem (or make an offer to do so) any such other Pari
Passu Indebtedness, pro rata in proportion to the respective principal amounts
of the Notes and such other Indebtedness required to be redeemed, the maximum
principal amount of Notes and Pari Passu Indebtedness that may be redeemed out
of the amount (the “Payment Amount”) of such Excess Proceeds;

 

(2)                                  the
offer price for the Notes shall be payable in cash in an amount equal to 100%
of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer,
plus accrued and unpaid interest thereon, if any, to the date such Net Proceeds
Offer is consummated (the “Offered Price”), and the redemption price for
such Pari Passu Indebtedness

 

56

 

(the “Pari
Passu Indebtedness Price”) shall be as set forth in the related documentation
governing such Indebtedness;

 

(3)                                  if
the aggregate Offered Price of Notes validly tendered and not withdrawn by
Holders thereof exceeds the pro rata
portion of the Payment Amount allocable to the Notes, Notes to be purchased
shall be selected on a pro rata basis; and

 

(4)                                  upon
completion of such Net Proceeds Offer in accordance with the foregoing
provisions, the amount of Excess Proceeds with respect to which such Net Proceeds
Offer was made shall be deemed to be zero.

 

To the extent that the sum of the aggregate
Offered Price of Notes tendered pursuant to a Net Proceeds Offer and the
aggregate Pari Passu Indebtedness Price paid to the holders of such Pari Passu
Indebtedness is less than the Payment Amount relating thereto (such shortfall
constituting a “Net Proceeds Deficiency”), the Issuer may use the Net
Proceeds Deficiency, or a portion thereof, for general corporate purposes,
subject to the provisions of this Indenture.

 

In the event of the transfer of substantially
all (but not all) of the assets of the Issuer and the Restricted Subsidiaries
as an entirety to a Person in a transaction covered by and effected in
accordance with Section 5.01 the successor corporation shall be deemed to
have sold for cash at Fair Market Value the assets of the Issuer and the
Restricted Subsidiaries not so transferred for purposes of this covenant, and
shall comply with the provisions of this covenant with respect to such deemed
sale as if it were an Asset Sale (with such Fair Market Value being deemed to
be Net Available Proceeds for such purpose).

 

The Issuer shall comply with applicable
tender offer rules, including the requirements of Rule 14e-1 under the Exchange
Act and any other applicable laws and regulations in connection with the
purchase of Notes pursuant to a Net Proceeds Offer.  To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.09, the Issuer
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.09 by
virtue of this compliance.

 

SECTION 4.10.                                                         Limitations
on Transactions with Affiliates.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, in one transaction or a
series of related transactions, sell, lease, transfer or otherwise dispose of
any of its assets to, or purchase any assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate involving aggregate consideration in excess of $60,000 (an “Affiliate
Transaction”), unless:

 

(1)                                  such
Affiliate Transaction is on terms that are no less favorable to the Issuer or
the relevant Restricted Subsidiary than those that may have been obtained in a
comparable transaction at such time on an arm’s-length basis by the Issuer or
that Restricted

 

57

 

Subsidiary
from a Person that is not an Affiliate of the Issuer or that Restricted
Subsidiary; and

 

(2)                                  the
Issuer delivers to the Trustee:

 

(a)                                  with
respect to any Affiliate Transaction involving aggregate value of $5.0 million
or more, an Officers’ Certificate certifying that such Affiliate Transaction
complies with clause (1) above;

 

(b)                                 with
respect to any Affiliate Transaction involving aggregate value in excess of
$10.0 million, an Officers’ Certificate certifying that such Affiliate
Transaction complies with clause (1) above and a Secretary’s Certificate
which sets forth and authenticates a resolution that has been adopted by the
Independent Directors approving such Affiliate Transaction; and

 

(c)                                  with
respect to any Affiliate Transaction involving aggregate value of $25.0 million
or more, the certificates described in the preceding clause (b) and (x) a
written opinion as to the fairness of such Affiliate Transaction to the Issuer
or such Restricted Subsidiary from a financial point of view or (y) a
written appraisal supporting the value of such Affiliate Transaction, in either
case, issued by an Independent Financial Advisor.

 

The foregoing restrictions shall not apply
to:

 

(1)                                  transactions
exclusively between or among (a) the Issuer and one or more Restricted
Subsidiaries or (b) Restricted Subsidiaries; provided, in each case, that no Affiliate of the Issuer (other than
another Restricted Subsidiary) owns Equity Interests of any such Restricted
Subsidiary;

 

(2)                                  reasonable
director, officer, employee and consultant compensation (including bonuses) and
other benefits (including retirement, health, stock and other benefit plans)
and indemnification arrangements;

 

(3)                                  loans
and advances permitted by clause (3) of the definition of “Permitted Investments”;

 

(4)                                  any
agreement as in effect as of the Issue Date or any extension, amendment or
modification thereto (so long as any such extension, amendment or modification
satisfies the requirements set forth in clause (1) of the first paragraph of
this Section 4.10) or any transaction contemplated thereby;

 

58

 

(5)                                  Restricted
Payments of the type described in clause (1), (2) or (4) of the definition of “Restricted
Payment” and which are made in accordance with Section 4.08; or

 

(6)                                  sales
of Qualified Equity Interests for cash by the Issuer to an Affiliate.

 

SECTION 4.11.                                                         Limitations
on Liens.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Lien of any nature whatsoever against (other than
Permitted Liens) any assets of the Issuer or any Restricted Subsidiary (including
Equity Interests of a Restricted Subsidiary), whether owned at the Issue Date
or thereafter acquired, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom, which Lien secures Indebtedness
or trade payables, unless contemporaneously therewith:

 

(1)                                  in
the case of any Lien securing an obligation that ranks pari passu with the Notes or a Note Guarantee, effective provision
is made to secure the Notes or such Note Guarantee, as the case may be, at
least equally and ratably with or prior to such obligation with a Lien on the
same collateral; and

 

(2)                                  in
the case of any Lien securing an obligation that is subordinated in right of
payment to the Notes or a Note Guarantee, effective provision is made to secure
the Notes or such Note Guarantee, as the case may be, with a Lien on the same
collateral that is prior to the Lien securing such subordinated obligation,

 

in each case,
for so long as such obligation is secured by such Lien.

 

SECTION 4.12.                                                         Conduct
of Business.

 

The Issuer will not, and will not permit any
Restricted Subsidiary to, engage in any business other than the Permitted
Business.

 

SECTION 4.13.                                                         Additional
Note Guarantees.

 

If, after the Issue Date, (a) the Issuer or
any Restricted Subsidiary shall acquire or create another Subsidiary (other
than (i) a Subsidiary that has been designated an Unrestricted Subsidiary
or (ii) during a Suspension Period, a Subsidiary exclusively engaged in
mortgage origination, title or insurance businesses) or (b) any Unrestricted
Subsidiary is redesignated a Restricted Subsidiary, then, in each such case,
the Issuer shall cause such Restricted Subsidiary to:

 

(1)                                  execute
and deliver to the Trustee (a) a supplemental indenture in form and substance
satisfactory to the Trustee pursuant to which such Restricted Subsidiary

 

59

 

shall
unconditionally guarantee all of the Issuer’s obligations under the Notes and
this Indenture and (b) a notation of guarantee in respect of its Note Guarantee;
and

 

(2)                                  deliver
to the Trustee one or more Opinions of Counsel that such supplemental indenture
(a) has been duly authorized, executed and delivered by such Restricted
Subsidiary and (b) constitutes a valid and legally binding obligation of such
Restricted Subsidiary in accordance with its terms.

 

SECTION 4.14.                                                         Limitations
on Dividend and Other Restrictions Affecting Restricted Subsidiaries.

 

The Issuer shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to:

 

(a)                                  pay
dividends or make any other distributions on or in respect of its Equity
Interests;

 

(b)                                 make
loans or advances or pay any Indebtedness or other obligation owed to the
Issuer or any other Restricted Subsidiary; or

 

(c)                                  transfer
any of its assets to the Issuer or any other Restricted Subsidiary;

 

except for:

 

(1)                                  encumbrances
or restrictions existing under or by reason of applicable law;

 

(2)                                  encumbrances
or restrictions existing under this Indenture, the Notes and the Note
Guarantees;

 

(3)                                  non-assignment
provisions of any contract or any lease entered into in the ordinary course of
business;

 

(4)                                  encumbrances
or restrictions existing under agreements existing on the date hereof
(including, without limitation, the Credit Facilities) as in effect on the date
hereof or on any Reversion Date as in effect on that date;

 

(5)                                  restrictions
on the transfer of assets subject to any Lien permitted under this Indenture
imposed by the holder of such Lien;

 

(6)                                  restrictions
on the transfer of assets imposed under any agreement to sell such assets
permitted under this Indenture to any Person pending the closing of such sale;

 

60

 

(7)                                  any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the assets of any Person, other than the Person
or the assets so acquired;

 

(8)                                  encumbrances
or restrictions arising in connection with Refinancing Indebtedness; provided, however,
that any such encumbrances and restrictions are not materially more restrictive
with respect to any Restricted Subsidiary than those in effect on the Issue
Date with respect to that Restricted Subsidiary pursuant to the agreements creating
or evidencing the Indebtedness being refinanced;

 

(9)                                  customary
provisions in leases, partnership agreements, limited liability company
organizational governance documents, joint venture agreements and other similar
agreements entered into in the ordinary course of business that restrict the
transfer of leasehold interests or ownership interests in such partnership,
limited liability company, joint venture or similar Person;

 

(10)                            Purchase
Money Indebtedness incurred in compliance with Section 4.06 that impose
restrictions of the nature described in clause (c) above on the assets acquired;
and

 

(11)                            any
encumbrances or restrictions imposed by any amendments or refinancings of the
contracts, instruments or obligations referred to in clauses (1) through (10)
above; provided that such amendments or
refinancings are, in the good faith judgment of the Issuer’s Board of
Directors, no more materially restrictive with respect to such encumbrances and
restrictions than those prior to such amendment or refinancing.

 

SECTION 4.15.                                                         Limitations
on Designation of Unrestricted Subsidiaries.

 

The Issuer may designate any Subsidiary of
the Issuer as an “Unrestricted Subsidiary” under this Indenture (a “Designation”) only if:

 

(1)                                  no
Default shall have occurred and be continuing at the time of or after giving
effect to such Designation; and

 

(2)                                  the
Issuer would be permitted to make, at the time of such Designation, (a) a
Permitted Investment or (b) an Investment pursuant to the first paragraph of Section 4.08,
in either case, in an amount (the “Designation Amount”) equal to the
Fair Market Value of the Issuer’s proportionate interest in such Subsidiary on
such date.

 

No Subsidiary shall be Designated as an “Unrestricted
Subsidiary” unless such Subsidiary:

 

(1)                                  has
no Indebtedness other than Permitted Unrestricted Subsidiary Debt;

 

61

 

(2)                                  is
not party to any agreement, contract, arrangement or understanding with the
Issuer or any Restricted Subsidiary unless the terms of the agreement,
contract, arrangement or understanding are no less favorable to the Issuer or
the Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Issuer or such Restricted Subsidiary;

 

(3)                                  is
a Person with respect to which neither the Issuer nor any Restricted Subsidiary
has any direct or indirect obligation (a) to subscribe for additional Equity Interests
or (b) to maintain or preserve the Person’s financial condition or to cause the
Person to achieve any specified levels of operating results; and

 

(4)                                  has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Issuer or any Restricted Subsidiary, except for any guarantee
given solely to support the pledge by the Issuer or any Restricted Subsidiary
of the Equity Interests of such Unrestricted Subsidiary, which guarantee is not
recourse to the Issuer or any Restricted Subsidiary, and except to the extent
the amount thereof constitutes a Restricted Payment permitted pursuant to Section 4.08.

 

If, at any
time, any Unrestricted Subsidiary fails to meet the preceding requirements as
an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of the
Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary as of the date and, if the Indebtedness is
not permitted to be incurred under Section 4.06 or the Lien is not
permitted under Section 4.11, the Issuer shall be in default of the applicable
covenant.

 

As of the Issue Date, the Issuer shall be
deemed to have Designated MTH Mortgage, LLC and Texas Home Mortgage Company as
Unrestricted Subsidiaries.

 

The Issuer may redesignate an Unrestricted
Subsidiary as a Restricted Subsidiary (a “Redesignation”)
only if:

 

(1)                                  no
Default shall have occurred and be continuing at the time of and after giving
effect to such Redesignation; and

 

(2)                                  all
Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding
immediately following such Redesignation would, if incurred or made at such
time, have been permitted to be incurred or made for all purposes of this
Indenture.

 

All Designations and Redesignations must be
evidenced by resolutions of the Board of Directors of the Issuer, delivered to
the Trustee certifying compliance with the foregoing provisions.

 

SECTION 4.16.                                                         [Intentionally
Omitted]

 

62

 

SECTION 4.17.                                                         Maintenance
of Properties; Insurance; Compliance with Law.

 

(a)                                  The
Issuer shall, and shall cause each of its Restricted Subsidiaries to, at all
times cause all properties used or useful in the conduct of their business to
be maintained and kept in good condition, repair and working order (reasonable
wear and tear excepted) and supplied with all necessary equipment, and shall
cause to be made all necessary repairs, renewals, replacements, necessary
betterments and necessary improvements thereto.

 

(b)                                 The
Issuer shall maintain, and shall cause to be maintained for each of its
Restricted Subsidiaries, insurance covering such risks as are usually and
customarily insured against by corporations similarly situated in the markets
where the Issuer and the Restricted Subsidiaries conduct homebuilding
operations, in such amounts as shall be customary for corporations similarly
situated and with such deductibles and by such methods as shall be customary
and reasonably consistent with past practice.

 

(c)                                  The
Issuer shall, and shall cause each of its Subsidiaries to, comply with all
statutes, laws, ordinances or government rules and regulations to which they
are subject, non-compliance with which would materially adversely affect the
business, earnings, properties, assets or financial condition of the Issuer and
their Subsidiaries taken as a whole.

 

SECTION 4.18.                                                         Payments
for Consent.

 

The Issuer shall not, and shall not cause or
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Holder of any Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture or the Notes unless such
consideration is offered to be paid or agreed to be paid to all Holders which
so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.

 

SECTION 4.19.                                                         Legal
Existence.

 

Subject to Article Five, the Issuer shall do
or cause to be done all things necessary to preserve and keep in full force and
effect (i) its legal existence, and the corporate, partnership or other
existence of each Restricted Subsidiary, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Restricted Subsidiary and the rights (charter and statutory), licenses and
franchises of the Issuer and its Restricted Subsidiaries; provided that
the Issuer shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries if the Board of Directors of the Issuer shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Issuer and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders.

 

63

 

SECTION 4.20.                                                         Change
of Control Offer.

 

Upon the occurrence of a Change of Control
Triggering Event, the Issuer shall be obligated to make an Offer to Purchase
(the “Change of Control Offer”), and shall purchase, on a Business Day (the
“Change of Control Payment Date”) not more than 60 nor less than 30 days
following the occurrence of the Change of Control, all of the then outstanding
Notes at a purchase price (the “Change of Control Purchase Price”) equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, thereon to the Change of Control Payment Date.  The Change of Control Offer shall remain open
for at least 20 Business Days and until the close of business on the Change of
Control Payment Date.

 

Within 30 days following the date upon which
a Change of Control Triggering Event occurs (the “Change of Control Date”),
the Issuer shall send, by first class mail, a notice to each Holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer.  The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders
to tender Notes pursuant to the Change of Control Offer.

 

Any amounts remaining after the purchase of
Notes pursuant to a Change of Control Offer shall be returned by the Trustee to
the Issuer.

 

The Issuer’s obligation to make a Change of
Control Offer will be satisfied if a third party makes the Change of Control
Offer in the manner and at the times and otherwise in compliance with the
requirements applicable to a Change of Control Offer made by the Issuer and
purchases all Notes properly tendered and not withdrawn under the Change of
Control Offer.

 

The Issuer shall comply with applicable
tender rules, including the requirements of Rule 14e-1 under the Exchange
Act and any other applicable laws and regulations in connection with the
purchase of Notes pursuant to a Change of Control Offer.  To the extent the provisions of any
securities laws or regulations conflict with the provisions under this
Section 4.20, the Issuer shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.20 by virtue thereof.

 

SECTION 4.21.                                                         Suspension
Period.

 

During a Suspension Period, the provisions of
the Indenture described under Sections 4.06, 4.08, 4.09, 4.10, 4.12, 4.14, 4.15
and 4.20 (collectively, the “Suspendable Covenants”) will not
apply.  All other covenants and
provisions of this Indenture will apply at all times so long as any Notes
remain outstanding.

 

On the Reversion Date, all Indebtedness
incurred during the Suspension Period will be classified to have been incurred
pursuant to the Ratio Exception or one of the clauses set forth in the
definition of Permitted Indebtedness (to the extent such Indebtedness would be
permitted to be incurred thereunder as of the Reversion Date and after giving
effect to Indebtedness

 

64

 

incurred prior to the
Suspension Period and outstanding on the Reversion Date).  To the extent any Indebtedness would not so
be permitted to be incurred pursuant to the Ratio Exception or any of the
clauses set forth in the definition of Permitted Indebtedness, such
Indebtedness will be deemed to have been outstanding on the Issue Date, so that
it is classified as Permitted Indebtedness under clause (3) of the second
paragraph of Section 4.06 and permitted to be refinanced under clause (11) of
the second paragraph of Section 4.06.

 

For purposes of calculating the amount
available to be made as Restricted Payments under clause (3) of the first
paragraph of Section 4.08, calculations under that clause will be made with
reference to the Measurement Date as set forth in that clause.  Accordingly, Restricted Payments made during
the Suspension Period will reduce the amount available to be made as Restricted
Payments under clause (3) and the items specified in subclauses (a) through (e)
of clause (3) that occur during the Suspension Period will increase the amount
available to be made as Restricted Payments under clause (3).  Any Restricted Payments made during the Suspension
Period that are of the type described in clause (4) under the second paragraph
of Section 4.08 shall reduce the amounts permitted to be incurred under such
clause (4) on the Reversion Date.

 

For purposes of Section 4.09, on the
Reversion Date, the Net Proceeds Offer Amount will be reset to zero.

 

ARTICLE FIVE

 

SUCCESSOR
CORPORATION

 

SECTION 5.01.                                                         Limitations
on Mergers, Consolidations, Etc.

 

The Issuer shall not, directly or indirectly,
in a single transaction or a series of related transactions, (a) consolidate or
merge with or into (other than a merger that satisfies the requirements of
clause (1) below with a Wholly-Owned Restricted Subsidiary solely for the purpose
of changing the Issuer’s jurisdiction of incorporation to another State of the
United States), or sell, lease, transfer, convey or otherwise dispose of or
assign all or substantially all of the assets of the Issuer or the Issuer and
the Restricted Subsidiaries (taken as a whole) or (b) adopt a Plan of
Liquidation unless, in either case:

 

(1)                                  either:

 

(a)                                  the
Issuer will be the surviving or continuing Person; or

 

(b)                                 the
Person formed by or surviving such consolidation or merger or to which such
sale, lease, conveyance or other disposition shall be made (or, in

 

65

 

the case of a
Plan of Liquidation, any Person to which assets are transferred) (collectively,
the “Successor”) is a corporation or
limited liability company organized and existing under the laws of any State of
the United States of America or the District of Columbia, and the Successor
expressly assumes, by supplemental indenture in form and substance satisfactory
to the Trustee, all of the obligations of the Issuer under the Notes, this
Indenture and the Registration Rights Agreement; provided that at any
time the Successor is a limited liability company, there shall be a co-issuer
of the Notes that is a corporation;

 

(2)                                  immediately
after giving effect to such transaction and the assumption of the obligations
as set forth in clause (1)(b) above and the incurrence of any Indebtedness
to be incurred in connection therewith, no Default shall have occurred and be
continuing; and

 

(3)                                  if
such transaction or series of related transactions occurs other than during a
Suspension Period, immediately after and giving effect to such transaction and
the assumption of the obligations set forth in clause (1)(b) above and the
incurrence of any Indebtedness to be incurred in connection therewith, and the
use of any net proceeds therefrom on a pro forma basis, (a) the
Consolidated Net Worth of the Issuer or the Successor, as the case may be,
would be at least equal to the Consolidated Net Worth of the Issuer immediately
prior to such transaction and (b) the Issuer or the Successor, as the case
may be, could incur $1.00 of additional Indebtedness pursuant to the Ratio Exception.

 

For purposes of this Section 5.01, any
Indebtedness of the Successor which was not Indebtedness of the Issuer
immediately prior to the transaction shall be deemed to have been incurred in
connection with such transaction.

 

Except as provided under Section 10.04
no Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person, whether or not affiliated
with such Guarantor, unless:

 

(1)                                  either:

 

(a)                                  such
Guarantor will be the surviving or continuing Person; or

 

(b)                                 the
Person formed by or surviving any such consolidation or merger assumes, by
supplemental indenture in form and substance satisfactory to the Trustee, all
of the obligations of such Guarantor under the Note Guarantee of such
Guarantor, this Indenture and the Registration Rights Agreement; and

 

(2)                                  immediately
after giving effect to such transaction, no Default shall have occurred and be
continuing.

 

66

 

For purposes of the foregoing, the transfer
(by lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the assets of one or more
Restricted Subsidiaries, the Equity Interests of which constitute all or
substantially all of the assets of the Issuer, will be deemed to be the
transfer of all or substantially all of the assets of the Issuer.

 

Upon any consolidation, combination or merger
of the Issuer or a Guarantor, or any transfer of all or substantially all of
the assets of the Issuer in accordance with the foregoing, in which the Issuer
or such Guarantor is not the continuing obligor under the Notes or its Note
Guarantee, the surviving entity formed by such consolidation or into which the
Issuer or such Guarantor is merged or to which the conveyance, lease or
transfer is made will succeed to, and be substituted for, and may exercise
every right and power of, the Issuer or such Guarantor under this Indenture,
the Notes and the Note Guarantees with the same effect as if such surviving
entity had been named therein as the Issuer or such Guarantor and, except in
the case of a conveyance, transfer or lease, the Issuer or such Guarantor, as
the case may be, will be released from the obligation to pay the principal of
and interest on the Notes or in respect of its Note Guarantee, as the case may
be, and all of the Issuer’s or such Guarantor’s other obligations and covenants
under the Notes, this Indenture and its Note Guarantee, if applicable.

 

Notwithstanding the foregoing, any Restricted
Subsidiary may merge into the Issuer or another Restricted Subsidiary.

 

SECTION 5.02.                                                         Successor
Person Substituted.

 

Upon any consolidation or merger, or any
transfer of all or substantially all of the assets of the Issuer or any
Restricted Subsidiary in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the Issuer is merged or
to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer or such Restricted Subsidiary
under this Indenture with the same effect as if such successor corporation had
been named as the Issuer or such Restricted Subsidiary herein, and thereafter
the predecessor corporation shall be relieved of all obligations and covenants
under this Indenture and the Notes.

 

67

 

ARTICLE SIX

 

DEFAULTS AND
REMEDIES

 

SECTION 6.01.                                                         Events
of Default.

 

Each of the following is an “Event of
Default”:

 

(1)                                  failure
by the Issuer to pay interest on any of the Notes when it becomes due and
payable and the continuance of any such failure for 30 days;

 

(2)                                  failure
by the Issuer to pay the principal on any of the Notes when it becomes due and
payable, whether at stated maturity, upon redemption, upon purchase, upon
acceleration or otherwise;

 

(3)                                  failure
by the Issuer to comply with Section 5.01 or, except in a Suspension
Period, in respect of its obligations to make a Change of Control Offer;

 

(4)                                  failure
by the Issuer to comply with any other agreement or covenant in this Indenture
and continuance of this failure for 30 days after notice of the failure has
been given to the Issuer by the Trustee or by the Holders of at least 25% of
the aggregate principal amount of the Notes then outstanding;

 

(5)                                  default
under any mortgage, indenture or other instrument or agreement under which
there may be issued or by which there may be secured or evidenced Indebtedness
of the Issuer or any Restricted Subsidiary, whether such Indebtedness now
exists or is incurred after the Issue Date, which default:

 

(a)                                  is
caused by a failure to pay when due principal on such Indebtedness within the
applicable express grace period,

 

(b)                                 results
in the acceleration of such Indebtedness prior to its express final maturity or

 

(c)                                  results
in the commencement of judicial proceedings to foreclose upon, or to exercise
remedies under applicable law or applicable security documents to take
ownership of, the assets securing such Indebtedness, and

 

in each case,
the principal amount of such Indebtedness, together with any other Indebtedness
with respect to which an event described in clause (a), (b) or (c) has occurred
and is continuing, aggregates $10.0 million or more;

 

68

 

(6)                                  one
or more judgments or orders that exceed $10.0 million in the aggregate (net of
amounts covered by insurance or bonded) for the payment of money have been
entered by a court or courts of competent jurisdiction against the Issuer or
any Restricted Subsidiary and such judgment or judgments have not been
satisfied, stayed, annulled or rescinded within 60 days of being entered;

 

(7)                                  the
Issuer or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:

 

(a)                                  commences
a voluntary case,

 

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

 

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

 

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

 

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

 

(a)                                  is
for relief against the Issuer or any Significant Subsidiary as debtor in an
involuntary case,

 

(b)                                 appoints
a Custodian of the Issuer or any Significant Subsidiary or a Custodian for all
or substantially all of the assets of the Issuer or any Significant Subsidiary,
or

 

(c)                                  orders
the liquidation of the Issuer or any Significant Subsidiary,

 

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

 

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

 

Subject to Sections 7.01 and 7.02, the
Trustee shall not be charged with knowledge of any Default, Event of Default,
Change of Control or Asset Sale or the requirement for payment of Liquidated
Damages unless written notice thereof shall have been given to a Responsible
Officer at the Corporate Trust Office of the Trustee by the Issuer or any other
Person.

 

69

 

SECTION 6.02.                                                         Acceleration.

 

If an Event of Default (other than an Event
of Default specified in clause (7) or (8) of Section 6.01 with
respect to the Issuer), shall have occurred and be continuing, the Trustee, by
written notice to the Issuer, or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding by written notice to the Issuer
and the Trustee, may declare all amounts owing under the Notes to be due and
payable immediately.  Upon such declaration
of acceleration, the aggregate principal of and accrued and unpaid interest on
the outstanding Notes shall immediately become due and payable; provided, however,
that after such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of such
outstanding Notes may rescind and annul such acceleration if all Events of
Default, other than the nonpayment of accelerated principal and interest, have
been cured or waived as provided in this Indenture.  If an Event of Default specified in
clause (7) or (8) of Section 6.01 with respect to the Issuer occurs,
all outstanding Notes shall become due and payable without any further action
or notice.

 

SECTION 6.03.                                                         Other
Remedies.

 

If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, or premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture and may take any necessary action requested of it as
Trustee to settle, compromise, adjust or otherwise conclude any proceedings to
which it is a party.

 

The Trustee may maintain a proceeding even if
it does not possess any of the Notes or does not produce any of them in the
proceeding.  A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default.  No
remedy is exclusive of any other remedy. 
All available remedies are cumulative. 
Any costs associated with actions taken by the Trustee under this
Section 6.03 shall be reimbursed to the Trustee by the Issuer.

 

SECTION 6.04.                                                         Waiver
of Past Defaults and Events of Default.

 

Subject to Sections 6.02, 6.08 and 8.02, the
Holders of a majority in aggregate principal amount of the notes then
outstanding have the right to waive any existing Default or compliance with any
provision of this Indenture or the Notes. 
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.

 

70

 

SECTION 6.05.                                                         Control
by Majority.

 

The Holders of a majority in aggregate
principal amount of the Notes then outstanding may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee by this Indenture.  The Trustee, however, may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of another Holder not taking
part in such direction, and the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, determines
that the action so directed may not lawfully be taken or if the Trustee in good
faith shall, by a Responsible Officer, determine that the proceedings so
directed may involve it in personal liability; provided that the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

 

SECTION 6.06.                                                         Limitation
on Suits.

 

No Holder will have any right to institute
any proceeding with respect to this Indenture or for any remedy thereunder,
unless the Trustee:

 

(1)                                  has
failed to act for a period of 60 days after receiving written notice of a
continuing Event of Default by such Holder and a request to act by Holders of
at least 25% in aggregate principal amount of Notes outstanding;

 

(2)                                  has
been offered indemnity satisfactory to it in its reasonable judgment; and

 

(3)                                  has
not received from the Holders of a majority in aggregate principal amount of
the outstanding Notes a direction inconsistent with such request.

 

However, such
limitations do not apply to a suit instituted by a Holder of any Note for
enforcement of payment of the principal of or interest on such Note on or after
the due date therefor (after giving effect to the grace period specified in
clause (1) of Section 6.01).

 

SECTION 6.07.                                                         No
Personal Liability of Directors, Officers, Employees and Stockholders.

 

No director, officer, employee, incorporator
or stockholder of the Issuer will have any liability for any obligations of the
Issuer under the Notes or this Indenture or of any Guarantor under its Note
Guarantee or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. 
Each Holder by accepting a Note waives and releases all such
liability.  The waiver and release are
part of the consideration for issuance of the Notes and the Note Guarantees.

 

71

 

SECTION 6.08.                                                         Rights
of Holders To Receive Payment.

 

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

 

SECTION 6.09.                                                         Collection
Suit by Trustee.

 

If an Event of Default in payment of
principal, premium or interest specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Issuer or any Guarantor (or any other obligor
on the Notes) for the whole amount of unpaid principal and accrued interest
remaining unpaid, together with interest on overdue principal and, to the
extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate set forth in the Notes, and
such further amounts as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

 

SECTION 6.10.                                                         Trustee
May File Proofs of Claim.

 

The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07) and the Holders
allowed in any judicial proceedings relative to the Issuer or any Guarantor (or
any other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same after
deduction of its charges and expenses to the extent that any such charges and expenses
are not paid out of the estate in any such proceedings and any custodian in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07.

 

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

 

72

 

SECTION 6.11.                                                         Priorities.

 

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

 

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

 

SECOND:  to Holders for amounts due and unpaid on the
Notes for principal, premium, if any, and interest (including Additional
Interest, if any) as to each, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes; and

 

THIRD:  to the Issuer or, to the extent the Trustee
collects any amount from any Guarantor, to such Guarantor.

 

The Trustee may fix a record date and payment
date for any payment to Holders pursuant to this Section 6.11.

 

SECTION 6.12.                                                         Undertaking
for Costs.

 

In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant.  This Section 6.12
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.08 or a suit by Holders of more than 10% in principal amount of the Notes
then outstanding.

 

SECTION 6.13.                                                         Restoration
of Rights and Remedies.

 

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

 

73

 

ARTICLE SEVEN

 

TRUSTEE

 

SECTION 7.01.                                                         Duties
of Trustee.

 

(a)                                  If
an Event of Default actually known to a Responsible Officer of the Trustee has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the same
circumstances in the conduct of his or her own affairs.

 

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

 

(1)                                  The
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others.

 

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

 

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

 

(1)                                  This
paragraph does not limit the effect of paragraph (b) of this Section 7.01.

 

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

 

(3)                                  The
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to
the terms hereof.

 

(4)                                  No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its rights, powers or duties if it shall have reasonable grounds for believing
that repayment

 

74

 

of such funds
or adequate indemnity satisfactory to it against such risk or liability is not
reasonably assured to it.

 

(d)                                 Whether
or not therein expressly so provided, paragraphs (a), (b), (c) and (e) of this
Section 7.01 shall govern every provision of this Indenture that in any way
relates to the Trustee.

 

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

 

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

 

SECTION 7.02.                                                         Rights
of Trustee.

 

Subject to Section 7.01:

 

(1)                                  The
Trustee may rely on any document reasonably believed by it to be genuine and to
have been signed or presented by the proper person.  The Trustee need not investigate any fact or
matter stated in the document.

 

(2)                                  Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel, or both, which shall conform to the
provisions of Section 12.05.  The Trustee
shall be protected and shall not be liable for any action it takes or omits to
take in good faith in reliance on such certificate or opinion.

 

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

 

(4)                                  The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it reasonably believes to be authorized or within its rights or
powers; provided that the Trustee’s conduct does not constitute gross
negligence or willful misconduct.

 

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

 

75

 

SECTION 7.03.                                                         Individual
Rights of Trustee.

 

The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may make loans to, accept
deposits from, perform services for or otherwise deal with the either of the
Issuer or any Guarantor, or any Affiliates thereof, with the same rights it
would have if it were not Trustee.  Any
Agent may do the same with like rights. 
The Trustee, however, shall be subject to Sections 7.10 and 7.11.

 

SECTION 7.04.                                                         Trustee’s
Disclaimer.

 

The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture or the
Notes or any Guarantee, it shall not be accountable for the Issuer’s or any
Guarantor’s use of the proceeds from the sale of Notes or any money paid to the
Issuer or any Guarantor pursuant to the terms of this Indenture and it shall
not be responsible for any statement in the Notes, Guarantee or this Indenture
other than its certificate of authentication.

 

SECTION 7.05.                                                         Notice
of Defaults.

 

The Trustee shall, within 30 days after the
occurrence of any Default with respect to the Notes, give the Holders notice of
all uncured Defaults thereunder known to it; provided, however,
that, except in the case of an Event of Default in payment with respect to the
Notes or a Default in complying with Section 5.01, the Trustee shall be protected
in withholding such notice if and so long as a committee of its Responsible
Officers in good faith determines that the withholding of such notice is in the
interest of the Holders.

 

SECTION 7.06.                                                         Reports
by Trustee to Holders.

 

If required by TIA § 313(a), within 60
days after January 1 of any year, commencing January 1, 2000 the Trustee shall
mail to each Holder a brief report dated as of such January 1 that complies
with TIA § 313(a).  The Trustee also
shall comply with TIA § 313(b)(2). 
The Trustee shall also transmit by mail all reports as required by TIA
§ 313(c) and TIA § 313(d).

 

Reports pursuant to this Section 7.06 shall
be transmitted by mail:

 

(1)                                  to
all Holders of Notes, as the names and addresses of such Holders appear on the
Registrar’s books; and

 

(2)                                  to
such Holders of Notes as have, within the two years preceding such transmission,
filed their names and addresses with the Trustee for that purpose.

 

76

 

A copy of each report at the time of its
mailing to Holders shall be filed with the SEC and each stock exchange on which
the Notes are listed.  The Issuer shall
promptly notify the Trustee when the Notes are listed on any stock exchange.

 

SECTION 7.07.                                                         Compensation
and Indemnity.

 

The Issuer and the Guarantors shall pay to the
Trustee and Agents from time to time reasonable compensation for its services
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust).  The Issuer and the Guarantors shall reimburse
the Trustee and Agents upon request for all reasonable disbursements, expenses
and advances incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee’s agents and counsel.

 

The Issuer and the Guarantors shall indemnify
each of the Trustee and any predecessor Trustee for, and hold each of them
harmless against, any and all loss, damage, claim, liability or expense,
including without limitation taxes (other than taxes based on the income of the
Trustee or such Agent) and reasonable attorneys’ fees and expenses incurred by
each of them in connection with the acceptance or performance of its duties
under this Indenture including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder (including, without
limitation, settlement costs).  The
Trustee or Agent shall notify the Issuer and the Guarantors in writing promptly
of any claim asserted against the Trustee or Agent for which it may seek indemnity.  However, the failure by the Trustee or Agent
to so notify the Issuer and the Guarantors shall not relieve the Issuer and
Guarantors of their obligations hereunder except to the extent the Issuer and
the Guarantors are prejudiced thereby.

 

Notwithstanding the foregoing, the Issuer and
the Guarantors need not reimburse the Trustee for any expense or indemnify it
against any loss or liability incurred by the Trustee through its negligence or
bad faith.  To secure the payment
obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee except such money or property held in trust to pay principal of
and interest on particular Notes.  The
obligations of the Issuer and the Guarantors under this Section 7.07 to
compensate and indemnify the Trustee, Agents and each predecessor Trustee and
to pay or reimburse the Trustee, Agents and each predecessor Trustee for
expenses, disbursements and advances shall be joint and several liabilities of
the Issuer and each of the Guarantors and shall survive the resignation or
removal of the Trustee and the satisfaction, discharge or other termination of
this Indenture, including any termination or rejection hereof under any
Bankruptcy Law.

 

When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 6.01(7) or (8)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.

 

77

 

For purposes of this Section 7.07, the term “Trustee”
shall include any trustee appointed pursuant to this Article Seven.

 

SECTION 7.08.                                                         Replacement
of Trustee.

 

The Trustee may resign by so notifying the
Issuer and the Guarantors in writing. 
The Holders of a majority in principal amount of the outstanding Notes
may remove the Trustee by notifying the Issuer and the removed Trustee in
writing and may appoint a successor Trustee with the Issuer’s written consent,
which consent shall not be unreasonably withheld.  The Issuer may remove the Trustee at its
election if:

 

(1)                                  the
Trustee fails to comply with Section 7.10;

 

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

 

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

 

(4)                                  the
Trustee otherwise becomes incapable of acting.

 

If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the Issuer shall
promptly appoint a successor Trustee.

 

If a successor Trustee does not take office
within 60 days after the retiring Trustee resigns or is removed, the retiring
Trustee, the Issuer or the Holders of a majority in principal amount of the
outstanding Notes may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

 

If the Trustee fails to comply with Section
7.10, any Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Issuer.  Immediately following such delivery, the
retiring Trustee shall, subject to its rights under Section 7.07, transfer all
property held by it as Trustee to the successor Trustee, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  A successor Trustee shall
mail notice of its succession to each Holder. 
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Issuer obligations under Section 7.07 shall continue for the benefit
of the retiring Trustee.

 

78

 

SECTION 7.09.                                                         Successor
Trustee by Consolidation, Merger, etc.

 

If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust assets to, another entity, subject to Section 7.10,
the successor entity without any further act shall be the successor Trustee; provided
such entity shall be otherwise qualified and eligible under this Article Seven.

 

SECTION 7.10.                                                         Eligibility;
Disqualification.

 

This Indenture shall always have a Trustee
who satisfies the requirements of TIA § 310(a)(1) and (2) in every
respect.  The Trustee (together with its
corporate parent) shall have a combined capital and surplus of at least
$100,000,000 as set forth in the most recent applicable published annual report
of condition.  The Trustee shall comply
with TIA § 310(b), including the provision in § 310(b)(1).

 

SECTION 7.11.                                                         Preferential
Collection of Claims Against Issuer.

 

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

 

SECTION 7.12.                                                         Paying
Agents.

 

The Issuer shall cause each Paying Agent
other than the Trustee to execute and deliver to it and the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section 7.12:

 

(A)                              that
it will hold all sums held by it as agent for the payment of principal of, or
premium, if any, or interest on, the Notes (whether such sums have been paid to
it by the Issuer or by any obligor on the Notes) in trust for the benefit of
Holders or the Trustee;

 

(B)                                that
it will at any time during the continuance of any Event of Default, upon
written request from the Trustee, deliver to the Trustee all sums so held in
trust by it together with a full accounting thereof; and

 

(C)                                that
it will give the Trustee written notice within three (3) Business Days of any
failure of the Issuer (or by any obligor on the Notes) in the payment of any installment
of the principal of, premium, if any, or interest on, the Notes when the same
shall be due and payable.

 

79

 

ARTICLE EIGHT

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

SECTION 8.01.                                                         Without
Consent of Holders.

 

The Issuer and the Trustee may amend, waive
or supplement this Indenture, the Note Guarantees or the Notes without consent
of any Holder:

 

(1)                                  to
provide for the assumption of the Issuer’s obligations to the Holders pursuant
to Section 5.01;

 

(2)                                  to
provide for uncertificated Notes in addition to or in place of certificated
Notes;

 

(3)                                  to
cure any ambiguity, defect or inconsistency;

 

(4)                                  to
release any Guarantor from any of its obligations under its Notes Guarantee or
this Indenture (to the extent permitted by this Indenture);

 

(5)                                  to
maintain the qualification of this Indenture under the TIA; or

 

(6)                                  to
make any other change that does not materially adversely affect the rights of
any Holder hereunder.

 

The Trustee is hereby authorized to join with
the Issuer and the Guarantors in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations which may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which adversely affects its own rights, duties or immunities under this Indenture.

 

SECTION 8.02.                                                         With
Consent of Holders.

 

This Indenture or the Notes may be amended
with the consent (which may include consents obtained in connection with a
tender offer or exchange offer for Notes) of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding, and any existing
Default under, or compliance with any provision of, this Indenture may be
waived (other than any continuing Default in the payment of the principal or
interest on the Notes) with the consent (which may include consents obtained in
connection with a tender offer or exchange offer for Notes) of the Holders of a
majority in aggregate principal amount of the Notes then outstanding; provided
that:

 

80

 

(a)                                  no
such amendment may, without the consent of the Holders of two-thirds in
aggregate principal amount of Notes then outstanding, amend the obligation of
the Issuer under Section 4.20 or the related definitions that could
adversely affect the rights of any Holder; and

 

(b)                                 without
the consent of each Holder affected, the Issuer and the Trustee may not:

 

(1)                                  change the maturity
of any Note;

 

(2)                                  reduce the amount,
extend the due date or otherwise affect the terms of any scheduled payment of
interest on or principal of the Notes;

 

(3)                                  reduce any premium
payable upon optional redemption of the Notes, change the date on which any
Notes are subject to redemption or otherwise alter the provisions with respect
to the redemption of the Notes;

 

(4)                                  make any Note payable
in money or currency other than that stated in the Notes;

 

(5)                                  modify or change any
provision of this Indenture or the related definitions to affect the ranking of
the Notes or any Note Guarantee in a manner that adversely affects the Holders;

 

(6)                                  reduce the percentage
of Holders necessary to consent to an amendment or waiver to this Indenture or
the Notes;

 

(7)                                  impair the rights of
Holders to receive payments of principal of or interest on the Notes;

 

(8)                                  release any Guarantor
from any of its obligations under its Note Guarantee or this Indenture, except
as permitted by this Indenture; or

 

(9)                                  make any change in
this Section 8.02.

 

After an amendment, supplement or waiver
under this Section 8.02 becomes effective, the Issuer shall mail to the Holders
a notice briefly describing the amendment, supplement or waiver.

 

Upon the written request of the Issuer,
accompanied by a Board Resolution authorizing the execution of any such
supplemental indenture, and upon the receipt by the Trustee of evidence reasonably
satisfactory to the Trustee of the consent of the Holders as aforesaid and upon
receipt by the Trustee of the documents described in Section 8.06, the Trustee
shall join with the Issuer and the Guarantors in the execution of such supplemental
indenture unless such

 

81

 

supplemental indenture affects
the Trustee’s own rights, duties or immunities under this Indenture, in which
case the Trustee may, but shall not be obligated to, enter into such supplemental
indenture.

 

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

 

SECTION 8.03.                                                         Compliance
with Trust Indenture Act.

 

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

 

SECTION 8.04.                                                         Revocation
and Effect of Consents.

 

Until an amendment, supplement, waiver or
other action becomes effective, a consent to it by a Holder of a Note is a
continuing consent conclusive and binding upon such Holder and every subsequent
Holder of the same Note or portion thereof, and of any Note issued upon the
transfer thereof or in exchange therefor or in place thereof, even if notation
of the consent is not made on any such Note. 
Any such Holder or subsequent Holder, however, may revoke the consent as
to his Note or portion of a Note, if the Trustee receives the written notice of
revocation before the date the amendment, supplement, waiver or other action becomes
effective.

 

The Issuer may, but shall not be obligated
to, fix a record date for the purpose of determining the Holders entitled to
consent to any amendment, supplement, or waiver.  If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date.  No such consent
shall be valid or effective for more than 90 days after such record date unless
the consent of the requisite number of Holders has been obtained.

 

After an amendment, supplement, waiver or
other action becomes effective, it shall bind every Holder, unless it makes a
change described in any of clauses (1) through (9) of Section 8.02.  In that case the amendment, supplement, waiver
or other action shall bind each Holder of a Note who has consented to it and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder’s Note.

 

SECTION 8.05.                                                         Notation
on or Exchange of Notes.

 

If an amendment, supplement, or waiver
changes the terms of a Note, the Trustee (in accordance with the specific
written direction of the Issuer) shall request the Holder of the Note (in
accordance with the specific written direction of the Issuer) to deliver it to
the Trustee.

 

82

 

In such case, the Trustee shall
place an appropriate notation on the Note about the changed terms and return it
to the Holder.  Alternatively, if the
Issuer or the Trustee so determines, the Issuer in exchange for the Note shall
issue, the Guarantors shall endorse, and the Trustee shall authenticate a new
Note that reflects the changed terms. 
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

 

SECTION 8.06.                                                         Trustee
To Sign Amendments, etc.

 

The Trustee shall sign any amendment,
supplement or waiver authorized pursuant to this Article Eight if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
If it does, the Trustee may, but need not, sign it.  In signing or refusing to sign such
amendment, supplement or waiver the Trustee shall be entitled to receive and,
subject to Section 7.01, shall be fully protected in relying upon an Officers’
Certificate and an Opinion of Counsel stating, in addition to the matters
required by Section 12.04, that such amendment, supplement or waiver is
authorized or permitted by this Indenture and is a legal, valid and binding
obligation of the Issuer and Guarantors, enforceable against the Issuer and
Guarantors in accordance with its terms (subject to customary exceptions).

 

ARTICLE NINE

 

DISCHARGE OF
INDENTURE; DEFEASANCE

 

SECTION 9.01.                                                         Discharge
of Indenture.

 

The Issuer may terminate its obligations and
the obligations of the Guarantors under the Notes, the Guarantees and this
Indenture, except the obligations referred to in the last paragraph of this
Section 9.01, if

 

(1)                                  all
the Notes that have been authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid and Notes for whose payment
money has been deposited in trust or segregated and held in trust by the Issuer
and thereafter repaid to the Issuer or discharged from this trust) have been delivered
to the Trustee for cancellation, or

 

(2)                                  (a)  all Notes not delivered to the Trustee for
cancellation otherwise have become due and payable or have been called for
redemption pursuant to paragraph 6 of the Notes, and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee trust funds in
trust in an amount of money sufficient to pay and discharge the entire
Indebtedness (including all principal and accrued interest) on the Notes not
theretofore delivered to the Trustee for cancellation,

 

83

 

(b)                                 the
Issuer has paid all sums payable by it under this Indenture,

 

(c)                                  the
Issuer has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at maturity or on the date of
redemption, as the case may be, and

 

(d)                                 the
Trustee, for the benefit of the Holders, has a valid, perfected, exclusive
security interest in this trust.

 

In addition, the Issuer must deliver an
Officers’ Certificate and an Opinion of Counsel (as to legal matters) stating
that all conditions precedent to satisfaction and discharge have been complied
with.

 

After such delivery, the Trustee shall
acknowledge in writing the discharge of the Issuer’s and the Guarantors’
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified below.

 

Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Issuer in Sections 7.07,
9.05 and 9.06 shall survive.

 

SECTION 9.02.                                                         Legal
Defeasance.

 

The Issuer may at its option, by Board
Resolution of the Board of Directors of the Issuer, be discharged from its
obligations with respect to the Notes and the Guarantors discharged from their
obligations under the Guarantees on the date the conditions set forth in Section
9.04 are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, such Legal Defeasance means
that the Issuer shall be deemed to have paid and discharged the entire
indebtedness represented by the Notes and to have satisfied all its other obligations
under such Notes and this Indenture insofar as such Notes are concerned (and
the Trustee, at the expense of the Issuer, shall, subject to Section 9.06,
execute instruments in form and substance reasonably satisfactory to the
Trustee and Issuer acknowledging the same), except for the following which
shall survive until otherwise terminated or discharged hereunder:  (A) the rights of Holders of outstanding
Notes to receive solely from the trust funds described in Section 9.04 and as
more fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due,
(B) the Issuer’s obligations with respect to such Notes under
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.11 and 4.19, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.07) and (D) this Article Nine. 
Subject to compliance with this Article Nine, the Issuer may
exercise its option under this Section 9.02 with respect to the Notes
notwithstanding the prior exercise of its option under Section 9.03 with
respect to the Notes.

 

84

 

SECTION 9.03.                                                         Covenant
Defeasance.

 

At the option of the Issuer, pursuant to a
Board Resolution of the Board of Directors of the Issuer, (x) the Issuer
and the Guarantors shall be released from their respective obligations under
Sections 4.02 (except for obligations mandated by the TIA), 4.05 through
4.17, inclusive, and 4.20 and 4.21 and clause (3) of the first paragraph of
Section 5.01 and (y) Section 6.01 (5) and (6) shall no longer apply
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 9.04 are satisfied (hereinafter, “Covenant Defeasance”).  For this purpose, such Covenant Defeasance
means that the Issuer and the Guarantors may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such specified Section or portion thereof, whether directly or indirectly by
reason of any reference elsewhere herein to any such specified Section or
portion thereof or by reason of any reference in any such specified Section or
portion thereof to any other provision herein or in any other document, but the
remainder of this Indenture and the Notes shall be unaffected thereby.

 

SECTION 9.04.                                                         Conditions
to Defeasance or Covenant Defeasance.

 

The following shall be the conditions to
application of Section 9.02 or Section 9.03 to the outstanding Notes:

 

(1)                                  the
Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, U.S. legal tender, U.S. Government Obligations or a combination
thereof, in such amounts as will be sufficient (without reinvestment) in the
opinion of a nationally recognized firm of independent public accountants
selected by the Issuer, to pay the principal of and interest on the Notes on
the stated date for payment or on the redemption date of the principal or
installment of principal of or interest on the Notes, and the Trustee must have
a valid, perfected, exclusive security interest in such trust,

 

(2)                                  in
the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that:

 

(a)                                  the
Issuer has received from, or there has been published by the Internal Revenue
Service, a ruling, or

 

(b)                                 since
the date hereof, there has been a change in the applicable U.S. federal income
tax law,

 

in either case
to the effect that, and based thereon this Opinion of Counsel shall confirm
that, the Holders will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred,

 

85

 

(3)                                  in
the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee
an Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if the Covenant Defeasance had
not occurred,

 

(4)                                  no
Default shall have occurred and be continuing on the date of such deposit
(other than a Default resulting from the borrowing of funds to be applied to
such deposit and the grant of any Lien securing such borrowing),

 

(5)                                  the
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under this Indenture or any other
material agreement or instrument to which the Issuer or any of its Subsidiaries
is a party or by which the Issuer or any of its Subsidiaries is bound,

 

(6)                                  the
Issuer shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by it with the intent of preferring the Holders
over any other of its creditors or with the intent of defeating, hindering,
delaying or defrauding any other of its creditors or others, and

 

(7)                                  the
Issuer shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that the conditions provided for in, in the
case of the Officers’ Certificate, clauses (1) through (6) and, in the case of
the Opinion of Counsel, clauses (1) (with respect to the validity and
perfection of the security interest), (2) and/or (3) and (5) of this paragraph
have been complied with.

 

If the funds deposited with the Trustee to
effect Covenant Defeasance are insufficient to pay the principal of and
interest on the Notes when due, then the Issuer’s obligations and the
obligations of Guarantors under this Indenture will be revived and no such defeasance
will be deemed to have occurred.

 

SECTION 9.05.                                                         Deposited
Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous
Provisions.

 

All money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee pursuant to Section
9.04 in respect of the outstanding Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent, to the
Holders of such Notes, of all sums due and to become due thereon in respect of
principal, premium, if any, and accrued interest, but such money need not be
segregated from other funds except to the extent required by law.

 

86

 

The Issuer and the Guarantors shall (on a
joint and several basis) pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 9.04 or the principal, premium, if any, and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

 

Anything in this Article Nine to the
contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from
time to time any money or U.S. Government Obligations held by it as provided in
Section 9.04 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, are in excess of the amount thereof which would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

 

SECTION 9.06.                                                         Reinstatement.

 

If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section 9.01,
9.02 or 9.03 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer’s and each Guarantor’s
obligations under this Indenture, the Notes and the Guarantees shall be revived
and reinstated as though no deposit had occurred pursuant to this
Article Nine until such time as the Trustee or Paying Agent is permitted
to apply all such money or U.S. Government Obligations in accordance with
Section 9.01; provided that if the Issuer or the Guarantors have made
any payment of principal of, premium, if any, or accrued interest on any Notes
because of the reinstatement of their obligations, the Issuer or the
Guarantors, as the case may be, shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.

 

SECTION 9.07.                                                         Moneys
Held by Paying Agent.

 

In connection with the satisfaction and
discharge of this Indenture, all moneys then held by any Paying Agent under the
provisions of this Indenture shall, upon written demand of the Issuer, be paid
to the Trustee, or if sufficient moneys have been deposited pursuant to Section
9.04, to the Issuer (or, if such moneys had been deposited by the Guarantors,
to such Guarantors), and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.

 

SECTION 9.08.                                                         Moneys
Held by Trustee.

 

Subject to applicable law, any moneys
deposited with the Trustee or any Paying Agent or then held by the Issuer or
the Guarantors in trust for the payment of the principal of, or premium, if
any, or interest on any Note that are not applied but remain unclaimed by the
Holder of such Note for two years after the date upon which the principal of,
or premium, if any, or interest

 

87

 

on such Note shall have
respectively become due and payable shall be repaid to the Issuer (or, if
appropriate, the Guarantors), or if such moneys are then held by the Issuer or
the Guarantors in trust, such moneys shall be released from such trust; and the
Holder of such Note entitled to receive such payment shall thereafter, as an
unsecured general creditor, look only to the Issuer and the Guarantors for the
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, that the
Trustee or any such Paying Agent, before being required to make any such
repayment, may, at the expense of the Issuer and the Guarantors, either mail to
each Holder affected, at the address shown in the register of the Notes
maintained by the Registrar pursuant to Section 2.03, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such mailing or publication, any unclaimed
balance of such moneys then remaining will be repaid to the Issuer.  After payment to the Issuer or the Guarantors
or the release of any money held in trust by the Issuer or any Guarantors, as
the case may be, Holders entitled to the money must look only to the Issuer and
the Guarantors for payment as general creditors unless applicable abandoned
property law designates another Person.

 

ARTICLE TEN

 

GUARANTEE OF
NOTES

 

SECTION 10.01.                                                   Guarantee.

 

Subject to the provisions of this
Article Ten, each Guarantor, by execution of this Indenture, jointly and
severally, unconditionally guarantees to each Holder (i) the due and punctual
payment of the principal of and interest on each Note, 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 the overdue principal of
and interest on the Notes, to the extent lawful, and the due and punctual
payment of all other Obligations and due and punctual performance of all
obligations of the Issuer to the Holders or the Trustee all in accordance with
the terms of such Note, this Indenture and the Registration Rights Agreement,
and (ii) in the 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, at stated maturity, by acceleration or otherwise.  Each Guarantor, by execution of this
Indenture, agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any
failure to enforce the provisions of any such Note, this Indenture or the Registration
Rights Agreement, any waiver, modification or indulgence granted to the Issuer
with respect thereto by the Holder of such Note, or any other circumstances
which may otherwise constitute a legal or equitable discharge of a surety or
such Guarantor.

 

88

 

Each Guarantor hereby waives diligence,
presentment, demand for payment, filing of claims with a court in the event of
merger or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest or notice with respect to any such Note or the Indebtedness
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged as to any such Note except by payment in full of the principal
thereof and interest thereon.  Each
Guarantor hereby agrees that, as between such Guarantor, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in
Article Six for the purposes of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such Obligations as provided in Article Six, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.

 

SECTION 10.02.                                                   Execution
and Delivery of Guarantee.

 

To further evidence the Guarantee set forth
in Section 10.01, each Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form included in Exhibit G hereto, shall be
endorsed on each Note authenticated and delivered by the Trustee and such
Guarantee shall be executed by either manual or facsimile signature of an
Officer or an Officer of a general partner, as the case may be, of each
Guarantor.  The validity and
enforceability of any Guarantee shall not be affected by the fact that it is
not affixed to any particular Note.

 

Each of the Guarantors hereby agrees that its
Guarantee set forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Guarantee.

 

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

 

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

 

SECTION 10.03.                                                   Limitation
of Guarantee.

 

The obligations of each Guarantor are limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under its Guarantee

 

89

 

not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.  Each Guarantor that makes a payment or
distribution under a Guarantee shall be entitled to a contribution from each
other Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Guarantor.

 

SECTION 10.04.                                                   Release
of Guarantor.

 

A Guarantor shall be released from all of its
obligations under its Guarantee if:

 

(i)                                     all
of the assets of such Guarantor have been sold or otherwise disposed of in a
transaction in compliance with the terms of this Indenture (including Sections
4.09, 4.20 and 5.01);

 

(ii)                                  all
of the Equity Interests held by the Issuer and the Restricted Subsidiaries of
such Guarantor have been sold or otherwise disposed of in a transaction in
compliance with the terms of this Indenture (including Sections 4.20 and 5.01);

 

(iii)                               the
Guarantor is designated an Unrestricted Subsidiary in compliance with the terms
of this Indenture (including Section 4.15);

 

and in each
such case, the Issuer has delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to such transactions have been complied with and that
such release is authorized and permitted hereunder.

 

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

 

SECTION 10.05.                                                   Waiver
of Subrogation.

 

Each Guarantor hereby irrevocably waives any
claim or other rights which it may now or hereafter acquire against the Issuer
that arise from the existence, payment, performance or enforcement of such
Guarantor’s obligations under its Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Notes against the Issuer, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Issuer, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or Note
on account of such claim or other rights. 
If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Holders, and shall forthwith be paid
to the Trustee for the benefit of such Holders to be

 

90

 

credited and applied upon the
Notes, whether matured or unmatured, in accordance with the terms of this Indenture.  Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this
Section 10.05 is knowingly made in contemplation of such benefits.

 

ARTICLE ELEVEN

 

[INTENTIONALLY
OMITTED]

 

ARTICLE TWELVE

 

MISCELLANEOUS

 

SECTION 12.01.                                                   Trust
Indenture Act Controls.

 

If any provision of this Indenture limits,
qualifies or conflicts with another provision which is required to be included
in this Indenture by the TIA, the required provision shall control.  If any provision of this Indenture modifies
any TIA provision that may be so modified, such TIA provision shall be deemed
to apply to this Indenture as so modified. 
If any provision of this Indenture excludes any TIA provision that may
be so excluded, such TIA provision shall be excluded from this Indenture.

 

The provisions of TIA §§ 310 through 317
that impose duties on any Person (including the provisions automatically deemed
included unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.

 

SECTION 12.02.                                                   Notices.

 

Except for notice or communications to
Holders, any notice or communication shall be given in writing and delivered in
person, sent by facsimile, delivered by commercial courier service or mailed by
first-class mail, postage prepaid, addressed as follows:

 

If to the
Issuer or any Guarantor:

 

MERITAGE HOMES CORPORATION

8501 E. Princess Drive

Suite 290 

Scottsdale, AZ  85255

 

Attention:  Chief Financial
Officer

 

91

 

Fax Number:  (480) 998-9178

 

with, in the
case of any notice furnished pursuant to Article Six, a copy to:

 

SNELL & WILMER L.L.P.

One Arizona Center

400 E. Van Buren St.

Phoenix, AZ  85004

 

Attention:  Steven D.
Pidgeon, Esq.

 

Fax Number:  (602) 382-6070

 

If to the
Trustee:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

707 Wilshire Blvd.

17th Floor

Los Angeles, CA  90017

 

Attention:  Corporate Trust
Department

 

Fax Number:  (213) 614-3355

 

Such notices or communications shall be
effective when received and shall be sufficiently given if so given within the
time prescribed in this Indenture.

 

The Issuer, the Guarantors or the Trustee by
written notice to the others may designate additional or different addresses
for subsequent notices or communications.

 

Any notice or communication mailed to a
Holder shall be mailed to him by first-class mail, postage prepaid, at his
address shown on the register kept by the Registrar.

 

Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.  If a notice or
communication to a Holder is mailed in the manner provided above, it shall be
deemed duly given, whether or not the addressee receives it.

 

In case by reason of the suspension of regular
mail service, or by reason of any other cause, it shall be impossible to mail
any notice as required by this Indenture, then such method of notification as
shall be made with the approval of the Trustee shall constitute a sufficient
mailing of such notice.

 

92

 

SECTION 12.03.                                                   Communications
by Holders with Other Holders.

 

Holders may communicate pursuant to TIA
§ 312(b) with other Holders with respect to their rights under this
Indenture or the Notes.  The Issuer, the
Guarantors, the Trustee, the Registrar and anyone else shall have the
protection of TIA § 312(c).

 

SECTION 12.04.                                                   Certificate
and Opinion as to Conditions Precedent.

 

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

 

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

 

(2)                                  an
Opinion of Counsel (which shall include the statements set forth in Section
12.05) stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

 

SECTION 12.05.                                                   Statements
Required in Certificate and Opinion.

 

Each certificate and opinion with respect to
compliance by or on behalf of the Issuer or any Guarantor with a condition or
covenant provided for in this Indenture shall include:

 

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

 

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

 

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

 

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

 

SECTION 12.06.                                                   Rules
by Trustee and Agents.

 

The Trustee may make reasonable rules for
action by or meetings of Holders.  The
Registrar and Paying Agent may make reasonable rules for their functions.

 

93

 

SECTION 12.07.                                                   Business
Days; Legal Holidays.

 

A “Business Day” is a day that is not a Legal
Holiday.  A “Legal Holiday” is a
Saturday, a Sunday or other day on which (i) commercial banks in the City
of New York are authorized or required by law to close or (ii) the New
York Stock Exchange is not open for trading. 
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.

 

SECTION 12.08.                                                   Governing
Law.

 

This Indenture and the Notes 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.

 

SECTION 12.09.                                                   No
Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret
another indenture, loan, security or debt agreement of the Issuer or any
Subsidiary thereof.  No such indenture,
loan, security or debt agreement may be used to interpret this Indenture.

 

SECTION 12.10.                                                   No
Recourse Against Others.

 

No recourse for the payment of the principal
of or premium, if any, or interest, including Additional Interest, on any of
the Notes, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Issuer
or any Guarantor in this Indenture or in any supplemental indenture, or in any
of the Notes, or because of the creation of any Indebtedness represented
thereby, shall be had against any stockholder, officer, director or employee,
as such, past, present or future, of the Issuer or of any successor corporation
or against the property or assets of any such stockholder, officer, employee or
director, either directly or through the Issuer or any Guarantor, or any
successor corporation thereof, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the Notes are
solely obligations of the Issuer and the Guarantors, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee or director of the Issuer or any Guarantor, or
any successor corporation thereof, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or
agreements contained in this Indenture or the Notes or implied therefrom, and
that any and all such personal liability of, and any and all claims against
every stockholder, officer, employee and director, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of the Notes. 
It is understood that this limitation on recourse is made expressly for
the benefit of any such shareholder, employee, officer or director and may be
enforced by any of them.

 

94

 

SECTION 12.11.                                                   Successors.

 

All agreements of the Issuer and the
Guarantors in this Indenture and the Notes shall bind their respective
successors.  All agreements of the
Trustee, any additional trustee and any Paying Agents in this Indenture shall
bind its successor.

 

SECTION 12.12.                                                   Multiple
Counterparts.

 

The parties may sign multiple counterparts of
this Indenture.  Each signed counterpart
shall be deemed an original, but all of them together represent one and the
same agreement.

 

SECTION 12.13.                                                   Table
of Contents, Headings, etc.

 

The table of contents, cross-reference sheet
and headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.

 

SECTION 12.14.                                                   Separability.

 

Each provision of this Indenture shall be
considered separable and if for any reason any provision which is not essential
to the effectuation of the basic purpose of this Indenture or the Notes 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.

 

95

 

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

 

 

	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MONTEREY HOMES ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE PASEO CROSSING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage
  Homes of Arizona, Inc., its Sole

  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MONTEREY HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-1

 

	
   

  	
  MERITAGE PASEO CONSTRUCTION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage
  Homes Construction, Inc.,

  its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES OF ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS GP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS LP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES OF CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HULEN PARK VENTURE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  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:                     Vice
  President-Secretary

  

 

S-3

 

	
   

  	
  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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS GP II, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS LP II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-HOMES NEVADA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-4

 

	
   

  	
  MTH-CAVALIER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Monterey Homes
  Construction, Inc., its Sole

  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH GOLF, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage
  Homes Construction, Inc., its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE HOMES OF COLORADO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-5

 

	
   

  	
  MERITAGE HOMES OF FLORIDA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-6

 

	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maddy
  Hall

  
	
   

  	
   

  	
  Name:  Maddy Hall

  
	
   

  	
   

  	
  Title:  Trust Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeanie
  Mar

  
	
   

  	
   

  	
  Name:  Jeanie Mar

  
	
   

  	
   

  	
  Title:  Vice President

  

 

S-7

 

EXHIBIT A

 

CUSIP             

 

MERITAGE HOMES CORPORATION

 

	
  No.

  	
   

  	
  $

  

 

61⁄4% SENIOR NOTE DUE 2015

 

MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Company”), for value received, promises to pay to CEDE &
CO. or registered assigns the principal sum of
$            
dollars on March 15, 2015.

 

Interest Payment Dates:  March 15 and September 15.

 

Record Dates: 
March 1 and September 1.

 

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.

 

A-1

 

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

 

	
   

  	
  MERITAGE
  HOMES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Dated:

 

Certificate of
Authentication

 

This is one of the 61⁄4%  Senior Notes due 2015 referred to in the
within-mentioned Indenture.

 

	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  

 

A-2

 

[FORM OF REVERSE OF NOTE]

 

MERITAGE HOMES CORPORATION

 

61⁄4% SENIOR NOTE DUE 2015

 

1.                                       Interest.  MERITAGE HOMES CORPORATION, a Maryland
corporation (the “Company”), 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 61⁄4% per annum. 
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 [insert applicable issue date] to but excluding
the date on which interest is paid. 
Interest shall be payable in arrears on each March 15 and
September 15 commencing on [insert first payment date].  Interest will be computed on the basis of a
360-day year of twelve 30-day months. 
The Company shall pay interest on overdue principal and on overdue
interest (to the full extent permitted by law) at a rate of 61⁄4% per annum.

 

2.                                       Method of
Payment.  The Company will pay
interest hereon (except defaulted interest) to the Persons who are registered
Holders at the close of business on March 1 or September 1 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
Company 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.  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, Wells
Fargo Bank, National Association (the “Trustee”) will act as a Paying Agent and
Registrar.  The Company may change any
Paying Agent or Registrar without notice. 
Neither the Company nor any of its Affiliates may act as Paying Agent or
Registrar.

 

4.                                       Indenture.  The Company issued the Notes under an
Indenture dated as of March 10, 2005 (the “Indenture”) among the Company,
the Guarantors (as defined in the Indenture) and the Trustee.  This is one of an issue of Notes of the
Company 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 Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement
of them.  Capitalized and certain other
terms used herein and not otherwise defined have the meanings set forth in the
Indenture.

 

5.                                       [Intentionally
Omitted]

 

6.                                       Optional
Redemption.  (a)  The Company, at its option, may redeem the
Notes, in whole or in part, at any time on or after March 15, 2010 upon
not less than 30 nor more than 60 days’ notice, at the redemption prices
(expressed as percentages of principal amount), set forth below, together, in
each case, with accrued and unpaid interest thereon, if any, to the Redemption

 

A-3

 

Date, if redeemed during the
twelve month period beginning on March 15 of each year listed below:

 

	
  Year

  	
   

  	
  Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  103.125

  	
  %

  
	
  2011

  	
   

  	
  102.083

  	
  %

  
	
  2012

  	
   

  	
  101.042

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(b)                                 Notwithstanding the
foregoing, at any time prior to March 15, 2008, the Issuer may redeem up to 35%
of the aggregate principal amount of the Notes with the net cash proceeds of
one or more Qualified Equity Offerings at a redemption price equal to 106.250%
of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest
thereon, if any, to the Redemption Date; provided that (1) at least
65% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption and
(2) the redemption occurs within 90 days of the date of the closing of any
such Qualified Equity Offering.

 

(c)                                  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
equitable.  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 Company shall fail to redeem any such Note.

 

7.                                       Notice of
Redemption.  Notice of redemption
will be mailed 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.  On and after the Redemption Date, unless the
Company defaults in making the redemption payment, interest ceases to accrue on
Notes or portions thereof called for redemption.

 

8.                                       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 Company shall make an offer to
purchase outstanding Notes in accordance with the procedures set forth in the
Indenture.

 

9.                                       Registration
Rights.  Pursuant to a Registration
Rights Agreement among the Company, the Guarantors and the Initial Purchasers,
the Company will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for notes of
a separate series issued under the Indenture (or a trust indenture
substantially identical to the Indenture in accordance with the terms of the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having substantially identical terms as the
Notes.  The Holders shall be entitled to
receive certain

 

A-4

 

additional interest payments in
the event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.

 

10.                                 Denominations,
Transfer, Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000.  A Holder may
transfer or exchange Notes 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.  The Registrar need not register the transfer
of or exchange any Notes or portion of a Note selected for redemption, or
register the transfer of or exchange any Notes for a period of 15 days before a
mailing of notice of redemption.

 

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

 

12.                                 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 Company at its written request. 
After that, Holders entitled to the money must look to the Company for
payment as general creditors unless an “abandoned property” law designates
another Person.

 

13.                                 Amendment,
Supplement, Waiver, Etc.  The
Company, 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 Trust Indenture Act of 1939, as
amended, and making any change that does not materially and adversely affect
the rights of any Holder.  Other
amendments and modifications of the Indenture or the Notes may be made by the
Company, 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, subject to certain exceptions requiring the consent of the Holders of
the particular Notes to be affected.

 

14.                                 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.

 

15.                                 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
Company) 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 Company, 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 Company, the
principal amount of and interest on, all Notes shall ipso  facto
become and be immediately due and payable without any declaration

 

A-5

 

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 Company under Article Five of the Indenture) if it determines that
withholding notice is in their best interests.

 

16.                                 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 Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.

 

17.                                 Discharge.  The Company’s 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.

 

18.                                 Guarantees.  The 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.

 

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

 

20.                                 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 Company, the Guarantor 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.

 

21.                                 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).

 

A-6

 

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

 

MERITAGE HOMES CORPORATION

8501 E. Princess Drive

Suite 290

Scottsdale, AZ  85255

 

Attention: 
Chief Financial Officer

 

A-7

 

ASSIGNMENT

 

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 Company.  The Agent may substitute another to act for
him.

 

 

	
  Date:

  	
   

  	
   

  	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign exactly as your name

  
	
   

  	
   

  	
   

  	
  appears on the other side of

  
	
   

  	
   

  	
   

  	
  this Note)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  	
   

  	
   

  
									

 

SIGNATURE GUARANTEE

 

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

 

A-8

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have all or any part
of this Note purchased by the Company pursuant to Section 4.09 or Section 4.20
of the Indenture, check the appropriate box:

 

	
  o

  	
   

  	
  Section 4.09

  	
   

  	
  o

  	
   

  	
  Section 4.20

  

 

If you want to have only part of the Note
purchased by the Company pursuant to Section 4.09 or Section 4.20 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.

 

A-9

 

EXHIBIT B

 

[FORM OF LEGEND FOR 144A NOTES AND OTHER NOTES

THAT ARE RESTRICTED NOTES]

 

The Note (or
its predecessor) evidenced hereby was originally issued in a transaction exempt
from registration under Section 5 of the United States Securities Act of
1933, and the Note evidenced hereby may not be offered, sold or otherwise
transferred in the absence of such registration or an applicable exemption
therefrom.  Each purchaser of the Note evidenced
hereby is hereby notified that the seller may be relying on the exemption from
the provisions of Section 5 of the Securities Act provided by
Rule 144A thereunder or another exemption under the Securities Act.  The holder of the Note evidenced hereby
agrees for the benefit of Meritage Homes Corporation that (a) such Note
may be resold, pledged or otherwise transferred only (1)(a) to a person who the
seller reasonably believes is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act), purchasing for its own account in a
transaction meeting the requirements of Rule 144A under the Securities
Act, (b) in a transaction meeting the requirements of Rule 144 of the
Securities Act, (c) outside the United States to a foreign person in a
transaction meeting the requirements of Rule 904 of Regulation S
under the Securities Act, (d) to an “accredited investor” within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an “Institutional
Accredited Investor”) that is purchasing at least $100,000 of Notes for its own
account or for the account of an institutional accredited investor (and based
upon an opinion of counsel if Meritage Homes Corporation so requests) or
(e) in accordance with another exemption from the registration
requirements of the Securities Act provided that in the case of a transfer
under clause (e) such transfer is subject to the receipt by the Trustee (and
Meritage Homes Corporation, if it so requests) of a certification of the
Transferor and an opinion of counsel to the effect that such transfer is in
compliance with the Securities Act, (2) to Meritage Homes Corporation or
any of its subsidiaries or (3) under an effective registration statement
under the Securities Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction and the indenture governing the Notes and (b) the holder
will, and each subsequent holder is required to, notify any purchaser from it
of the Note evidenced hereby of the resale restrictions set forth in (a)
above.  If any resale or other transfer
of any Note is proposed to be made under clause (a)(1)(d) above while
these transfer restrictions are in force then the transferor shall deliver a
letter from the transferee to Meritage Homes Corporation and the Trustee which
shall provide, among other things, that the transferee is an institutional
accredited investor and that it is acquiring the Securities for investment purposes
and not for distribution in violation of the Securities Act.

 

B-1

 

[FORM OF ASSIGNMENT FOR 144A NOTES AND OTHER
NOTES

THAT ARE RESTRICTED NOTES]

 

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 Company.  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.

 

B-2

 

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
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE: To be executed by an executive officer

  

 

B-3

 

EXHIBIT C

 

[FORM OF LEGEND FOR REGULATION S NOTE]

 

This Note has
not been registered under the U.S. Securities Act of 1933, as amended (the “Act”),
and, unless so registered, may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. Persons unless registered under
the Act or except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Act.

 

C-1

 

[FORM OF ASSIGNMENT FOR REGULATION S NOTE]

 

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 Company.  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

 

C-2

 

determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

 

C-3

 

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
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE: To be executed by an executive officer

  

 

C-4

 

EXHIBIT D

 

[FORM OF LEGEND FOR GLOBAL NOTE]

 

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.

 

D-1

 

EXHIBIT E

 

Form of Certificate To Be

Delivered in Connection with

Transfers to Non-QIB Accredited Investors

 

Wells Fargo
Bank, National Association

Meritage Homes Corporation

c/o Wells Fargo Bank, National Association

707 Wilshire Boulevard, 17th Floor

Los Angeles, CA  90017

 

Attention:  Corporate Trust
Department

 

Ladies and Gentlemen:

 

In connection with our proposed purchase of
61⁄4% Senior Notes due 2015 (the “Notes”) of Meritage Homes Corporation, a
Maryland Corporation (the “Company”), we confirm that:

 

1.                                       We
understand that any subsequent transfer of the Notes is subject to certain
restrictions and conditions set forth in the Indenture dated as of
March 10, 2005 relating to the Notes and we agree to be bound by, and not
to resell, pledge or otherwise transfer the Notes except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the “Securities
Act”).

 

2.                                       We
understand that the Notes have not been registered under the Securities Act or
any other applicable securities laws, have not been and will not be qualified
for sale under the securities laws of any non-U.S. jurisdiction and that the
Notes may not be offered, sold, pledged or otherwise transferred except as
permitted in the following sentence.  We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell any Notes, we will do so only (i)
to the Company or any subsidiary thereof, (ii) in accordance with Rule 144A
under the Securities Act to a “qualified institutional buyer” (as defined in
Rule 144A), (iii) to an institutional “accredited investor” (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
Notes, (iv) outside the United States to persons other than U.S. persons
in offshore transactions meeting the requirements of Rule 904 of Regulation S
under the Securities Act, (v) pursuant to the exemption form registration
provided by Rule 144 under the Securities Act (if applicable) or
(vi) pursuant to an effective registration statement, and we further agree
to provide to any person purchasing any of the Notes from us a notice advising
such purchaser that resales of the Notes are restricted as stated herein.

 

E-1

 

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

 

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

 

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

 

6.                                       We
are not acquiring the Notes with a view toward the distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any
state of the United States or any other applicable jurisdiction.

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name of Transferee]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
					

 

E-2

 

EXHIBIT F

 

Form of Certificate To Be Delivered

in Connection with Transfers

Pursuant to Regulation S

 

Wells Fargo
Bank, National Association

Meritage Homes Corporation

c/o Wells Fargo Bank, National Association

707 Wilshire Boulevard, 17th Floor

Los Angeles, CA  90017

 

Attention:  Corporate Trust Department

 

Re:                               Meritage Homes
Corporation, a Maryland corporation (the “Company”)

61⁄4% Senior Notes due 2015 (the “Notes”)

 

Dear Sirs:

 

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

 

(1)                                  the
offer of the Notes was not made to a U.S. person or to a person in the United
States;

 

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

 

(3)                                  no
directed selling efforts have been made in the United States in contravention
of the requirements of Rule 904(a) of Regulation S;

 

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

 

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

 

You are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or

 

F-1

 

official inquiry with respect
to the matters covered hereby.  Terms
used in this certificate have the meanings set forth in Regulation S.

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name of Transferee]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
				

 

F-2

 

EXHIBIT G

 

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 March 10, 2005 by and among Meritage
Homes Corporation, as issuer, the Guarantors, as guarantors, and Wells Fargo
Bank, National Association, as 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 Company 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]

 

G-1

 

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

 

	
   

  	
  [GUARANTORS]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

G-2Exhibit 4.5

 

 

 

 

REGISTRATION RIGHTS
AGREEMENT

 

Dated as of March 10,
2005

 

By and Among

 

MERITAGE HOMES CORPORATION

as Issuer,

 

the GUARANTORS
named herein

 

and

 

UBS SECURITIES LLC,

 

CITIGROUP GLOBAL
MARKETS INC.,

 

and J.P. MORGAN
SECURITIES INC.,

as Initial Purchasers

 

6 1/4% Senior
Notes due 2015

 

 

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Exchange
  Offer

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Shelf
  Registration Statement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Liquidated
  Damages

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Registration
  Procedures

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Registration
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Rules 144
  and 144A

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Underwritten
  Registrations

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  No Inconsistent Agreements

  	
   

  
	
   

  	
  (b)

  	
  Adjustments Affecting Registrable Notes

  	
   

  
	
   

  	
  (c)

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  (d)

  	
  Notices

  	
   

  
	
   

  	
  (e)

  	
  Guarantors

  	
   

  
	
   

  	
  (f)

  	
  Successors and Assigns

  	
   

  
	
   

  	
  (g)

  	
  Counterparts

  	
   

  
	
   

  	
  (h)

  	
  Headings

  	
   

  
	
   

  	
  (i)

  	
  Governing Law

  	
   

  
	
   

  	
  (j)

  	
  Severability

  	
   

  
	
   

  	
  (k)

  	
  Securities Held by the Company or Its
  Affiliates

  	
   

  
	
   

  	
  (l)

  	
  Third-Party Beneficiaries

  	
   

  
	
   

  	
  (m)

  	
  Attorneys’ Fees

  	
   

  
	
   

  	
  (n)

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  

 

i

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is dated as of March 10, 2004, by and among Meritage Homes 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, Citigroup
Global Markets Inc. and J.P. Morgan Securities Inc. (together, the “Initial
Purchasers”) on the other hand.

 

This Agreement is entered into in connection
with the Purchase Agreement, dated as of February 24, 2005, by and among
the Issuers and the Initial Purchasers, (the “Purchase Agreement”), relating
to the offering of $350,000,000 aggregate principal amount of the Company’s 6 1/4%
Senior Notes due 2015 (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.

 

 

“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 March 10, 2005, 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 March 10, 2005, 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.

 

2

 

“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.

 

3

 

“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.  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 effective by the Commission,
the Company will offer the Exchange Notes in

 

4

 

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 an
initial distribution, or if any Holder is not entitled to participate in the
Exchange Offer, the Company

 

5

 

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.

 

6

 

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) any Initial Purchaser so
requests 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).  Notwithstanding the foregoing,
in the event a Shelf Filing Event occurs as a result of the event set forth in Section 2(c)(ii),
the Issuers’ obligation to file and Initial Shelf Registration pursuant to this
Section 3 shall cease ab initio if
the Exchange Offer is

 

7

 

completed within 225 days of
the Issue Date, or, if such date is not a Business Day, the next day that is a
Business Day.

 

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 day after the Company determines or is
notified that such a Shelf Filing Event has occurred 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

 

8

 

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,
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)                                  The
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

 

9

 

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.

 

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

 

10

 

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 Statement,
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

 

11

 

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.

 

(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

 

12

 

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 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.

 

13

 

(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.

 

(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

 

14

 

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 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.

 

15

 

(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 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

 

16

 

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.

 

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.

 

17

 

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 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

 

18

 

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, 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.

 

19

 

(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).  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

 

20

 

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.

 

(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.

 

21

 

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.

 

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.

 

22

 

(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.

 

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

 

Meritage Homes Corporation

8501 East Princess Drive

Suite 290

Scottsdale, Arizona  85255

Telephone:  (480) 998-8700

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.

677 Washington Blvd.

Stanford, Connecticut  06901

Facsimile No.:  (203) 719-0680

Attention:  Legal and Compliance
Department

 

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

 

23

 

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.

 

(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

 

24

 

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.

 

(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.

 

25

 

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

 

	
   

  	
  MERITAGE HOMES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MONTEREY
  HOMES ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  PASEO CROSSING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage
  Homes of Arizona, Inc., its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MONTEREY
  HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  PASEO CONSTRUCTION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage
  Homes Construction, Inc., its Sole Member

  

 

S-1

 

	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  HOMES OF ARIZONA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  HOMES CONSTRUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS
  GP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS
  LP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEGACY/MONTEREY
  HOMES L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MTH-Texas
  GP, Inc., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-2

 

	
   

  	
  MERITAGE
  HOMES OF CALIFORNIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HULEN PARK
  VENTURE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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:                     Vice
  President-Secretary

  

 

S-3

 

	
   

  	
  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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS GP
  II, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-TEXAS LP
  II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH-HOMES
  NEVADA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-4

 

	
   

  	
  MTH-CAVALIER,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Monterey Homes
  Construction, Inc., its Sole

  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MTH GOLF,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Meritage Homes
  Construction, Inc., its Sole

  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-5

 

	
   

  	
  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:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  HOMES COLORADO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERITAGE
  HOMES OF FLORIDA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry W.
  Seay

  
	
   

  	
   

  	
  Name:               Larry W. Seay

  
	
   

  	
   

  	
  Title:                     Vice
  President-Secretary

  

 

S-6

 

	
   

  	
  UBS
  SECURITIES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Crowley

  
	
   

  	
   

  	
  Name:  Robert Crowley

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  [Signature
  illegible]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CITIGROUP GLOBAL MARKETS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cunningham

  
	
   

  	
   

  	
  Name:  Stephen Cunningham

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  J.P. MORGAN
  SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  [Signature
  illegible]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

S-7

 

Schedule A

 

Guarantors

 

1.               Monterey Homes Arizona, Inc.

2.               Meritage Paseo Crossing, LLC

3.               Monterey Homes Construction, Inc.

4.               Meritage Paseo Construction, LLC

5.               Meritage Homes of Arizona, Inc.

6.               Meritage Homes Construction, Inc.

7.               MTH-Texas GP, Inc.

8.               MTH-Texas LP, Inc.

9.               Legacy/Monterey Homes L.P.

10.         Meritage Homes of California, Inc.

11.         Legacy Operating Company, L.P.

12.         Hulen Park Venture, LLC

13.         Meritage Holdings, L.L.C.

14.         MTH-Texas GP II, Inc.

15.         MTH Homes-Texas, L.P.

16.         MTH-Texas LP II, Inc.

17.         MTH-Homes Nevada, Inc.

18.         MTH-Cavalier, LLC

19.         MTH Golf, LLC

20.         Legacy-Hammonds Materials, L.P.

21.         Meritage Homes of Colorado, Inc.

22.         Meritage Homes of Florida, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]