Document:

exv10w1

 

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

Dated as of April 21, 2004

By and Among

MERITAGE CORPORATION

as Issuer,

the GUARANTORS named herein

and

CITIGROUP GLOBAL MARKETS INC.

as Initial Purchaser

7% Senior Notes due 2014

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page

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

-i-

 

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is dated as of April
21, 2004, by and among Meritage Corporation, a Maryland corporation (the
“Company”), and each of the Guarantors (as defined herein) (the Company and the
Guarantors are referred to collectively herein as the “Issuers”), on the one
hand, and Citigroup Global Markets Inc. (the “Initial Purchaser”) on the other
hand.

          This Agreement is entered into in connection with the Purchase Agreement,
dated as of April 14, 2004, by and among the Issuers and the Initial Purchaser,
(the “Purchase Agreement”), relating to the offering of $130,000,000 aggregate
principal amount of the Company’s 7% Senior Notes due 2014 (including the
guarantees thereof by the Guarantors, the “Notes”). The execution and delivery
of this Agreement is a condition to the Initial Purchaser’s 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 April 21, 2004, 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 Purchaser” 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 April 21, 2004, the date of original issuance of
the Notes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     Section 2. Exchange Offer

          (a) The Issuers shall (i) file a Registration Statement (the “Exchange
Offer Registration Statement”) within 75 days after the Issue Date with the
Commission on an appropriate registration form with respect to a registered
offer (the “Exchange Offer”) to exchange any and all of the Registrable Notes
for a like aggregate principal amount of notes (including the guarantees with
respect thereto, the “Exchange Notes”) that are identical in all material
respects to the Notes (except that the Exchange Notes bear no restrictive
legend thereon and shall not contain terms with respect to Liquidated Damages
upon a Registration Default), (ii) use their respective reasonable best efforts
to cause the Exchange Offer Registration Statement to be declared effective
under the Securities Act within 150 days after the Issue Date and (iii) use
their respective reasonable best efforts to complete the Exchange Offer within
180 days after the Issue Date. 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

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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 Purchaser 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 Purchaser 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

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upon the request of any such Holder shall simultaneously with the delivery
of the Exchange Notes in the Exchange Offer, issue and deliver to any such
Holder, in exchange (the “Private Exchange”) for such Notes held by any such
Holder, a like principal amount of notes (the “Private Exchange Notes”) of the
Company that are identical in all material respects to the Exchange Notes,
except for the placement of a restrictive legend on such Private Exchange
Notes. The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes and bear the same CUSIP number as the Exchange
Notes.

         In connection with the Exchange Offer, the Company shall:

    (1) mail or cause to be mailed to each Holder entitled to
participate in the Exchange Offer a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;

    (2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;

    (3) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last Business Day on which
the Exchange Offer shall remain open; and

    (4) otherwise comply in all material respects with all applicable
laws, rules and regulations.

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

    (1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer and the Private
Exchange, if any;

    (2) deliver or cause to be delivered to the Trustee for cancellation
all Registrable Notes so accepted for exchange; and

    (3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case
may be, equal in principal amount to the Notes of such Holder so accepted
for exchange.

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

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

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

          (c) In the event that (i) any changes in law or the applicable
interpretations of the staff of the Commission do not permit the Issuers to
effect the Exchange Offer, (ii) for any reason the Exchange Offer is not
consummated within 180 days of the Issue Date, (iii) any Holder notifies the
Company that it is prohibited by law or the applicable interpretations of the
staff of the Commission from participating in the Exchange Offer, (iv) in the
case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such holder as an affiliate of any Issuer), (v) the Initial
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).

    The Issuers shall use their respective reasonable best efforts (x)
to cause the Initial Shelf Registration Statement to be declared
effective under the Securities Act on or prior to the 90th

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day after the Company determines or is notified that such a Shelf
Filing Event has occurred and (y) to keep the Initial Shelf Registration
Statement continuously effective under the Securities Act for the period
ending on the date which is two years from the date it becomes effective
(or one year if the Initial Shelf Registration Statement is filed at the
request of an Initial Purchaser), subject to extension pursuant to the
penultimate paragraph of Section 5 hereof (the “Effectiveness Period”),
or such shorter period ending when (i) all Registrable Notes covered by
the Initial Shelf Registration Statement have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration Statement or
cease to be outstanding, (ii) all Registrable Notes are eligible to be
sold to the public pursuant to Rule 144(k) under the Securities Act or
(iii) a Subsequent Shelf Registration Statement covering all of the
Registrable Notes covered by and not sold under the Initial Shelf
Registration Statement or an earlier Subsequent Shelf Registration
Statement has been declared effective under the Securities Act; provided,
however, that (i) the Effectiveness Period in respect of the Initial
Shelf Registration Statement shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery
requirements of Rule 174 under the Securities Act and as otherwise
provided herein and (ii) the Company may suspend the effectiveness of the
Initial Shelf Registration Statement by written notice to the Holders
solely as a result of the filing of a post-effective amendment to the
Initial Shelf Registration Statement where such post-effective amendment
is not yet effective and needs to be declared effective to permit holders
to use the related Prospectus.

    (b) Subsequent Shelf Registration Statements. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement
ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the
securities registered thereunder), the Issuers shall use their respective
reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall as soon as
practicable after such cessation amend the Initial Shelf Registration
Statement or such Subsequent Shelf Registration Statement, as the case
may be, in a manner to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional “shelf” Registration
Statement pursuant to Rule 415 covering all of the Registrable Notes
covered by and not sold under the Initial Shelf Registration Statement or
such earlier Subsequent Shelf Registration Statement (each, a “Subsequent
Shelf Registration Statement”). If a Subsequent Shelf Registration
Statement is filed, the Issuers shall use their respective reasonable
best efforts to cause the Subsequent Shelf Registration Statement to be
declared effective under the Securities Act as soon as practicable after
such filing and to keep such Subsequent Shelf Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration Statement and any Subsequent Shelf
Registration Statement was previously continuously effective. As used
herein, the term “Shelf Registration Statement” means the Initial Shelf
Registration Statement and any Subsequent Shelf Registration Statement.

    (c) Supplements and Amendments. The Issuers agree to supplement or
make amendments to the Shelf Registration Statement as and when required
by the rules, regulations or instructions applicable to the registration
form used for such Shelf Registration Statement or by the Securities Act
or rules and regulations thereunder for shelf registration, or if
reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement or
by any underwriter of such Registrable Notes; provided, however, that the
Issuers shall not be required to supplement or amend any Shelf
Registration

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Statement upon the request of a Holder or any underwriter if such
requested supplement or amendment would, in the good faith judgment of
the Company (based on advice of counsel), violate the Securities Act, the
Exchange Act or the rules and regulations promulgated thereunder.

     Section 4. Liquidated Damages

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

    (i) the Exchange Offer Registration Statement is not filed with the
Commission on or prior to the 75th day following the Issue Date, or, if
that day is not a Business Day, then the next day that is a Business Day,

    (ii) the Exchange Offer Registration Statement is not declared
effective on or prior to the 150th day following the Issue Date, or, if
that day is not a Business Day, then the next day that is a Business Day,

    (iii) the Exchange Offer is not completed on or prior to the 180th
day following the Issue Date, or, if that day is not a Business Day, then
the next day that is a Business Day, or

    (iv) the Shelf Registration Statement is required to be filed but is
not filed or declared effective within the time periods set forth herein
or is declared effective but thereafter ceases to be effective or usable
prior to the expiration of the Effectiveness Period, except if the Shelf
Registration Statement ceases to be effective or usable as specifically
permitted by the penultimate paragraph of Section 5 hereof

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

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

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

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

     Section 5. Registration Procedures

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

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

    (b) Prepare and file with the Commission such amendments and
post-effective amendments to each Initial Shelf Registration Statement or
Exchange Offer Registration Statement,

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as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the
Securities Act; and comply with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale
of any securities being sold by a Participating Broker-Dealer covered by
any such Prospectus, in each case, in accordance with the intended
methods of distribution set forth in such Registration Statement or
Prospectus, as so amended.

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

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

    (e) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period and if
requested by the managing underwriter or underwriters (if any), the
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement or any Participating
Broker-Dealer, as the case may be, (i) as promptly as practicable
incorporate in such Registration Statement or Prospectus a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters (if any), such Holders or any Participating
Broker-Dealer, as the case may be (based upon advice of counsel),
reasonably request as necessary to be included therein and (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the
Issuers shall not be required to take any action hereunder that would, in
the good faith judgment of the Company (based on advice of counsel),
violate applicable laws.

    (f) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, furnish to
each selling Holder of Registrable Notes and a single counsel to such
Holders, or each such Participating Broker-Dealer and their counsel, as
the case may be, who so requests and each managing underwriter, if any,
and a single counsel for such underwriters, at the sole expense of the
Company, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated
or deemed to be incorporated therein by reference and any exhibits.

    (g) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, deliver to
each selling Holder of Registrable Notes and a single counsel to such
Holders, or each such Participating Broker-Dealer and their counsel, as
the case may be, and the underwriters, if any, and a single counsel for
such underwriters, at the sole expense of the Company, as many copies of
the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request;
and, subject to the last paragraph of this Section 5, the Issuers hereby
consent to the use of such

-12-

 

Prospectus and each amendment or supplement thereto (provided the
manner of such use complies with any limitations resulting from any
applicable laws, including state securities or “Blue Sky” laws, and
subject to the provisions of this Agreement) by each of the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as
the case may be, and the underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes
or the sale by Participating Broker-Dealers of the Exchange Notes covered
by or pursuant to such Prospectus and any amendment or supplement
thereto.

    (h) Prior to any public offering of Registrable Notes or Exchange
Notes or any delivery of a Prospectus contained in the Exchange Offer
Registration Statement by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, use their reasonable
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer, as
the case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Notes or Exchange Notes, as the case may be, for offer
and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters reasonably
request in writing; provided, however, that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Company agrees to cause the
Company’s counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 5(h), keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of such Exchange Notes or Registrable Notes covered by the
applicable Registration Statement; provided, however, that no Issuer
shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction
where it is not then so subject or (C) subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction where it is
not then so subject.

    (i) If a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends and
shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or underwriters,
if any, or selling Holders may reasonably request at least two Business
Days prior to any sale of such Registrable Notes or Exchange Notes.

    (j) Use their reasonable best efforts to cause the Registrable Notes
or Exchange Notes covered by any Registration Statement to be registered
with or approved by such other governmental agencies or authorities as
may be reasonably necessary to enable the seller or sellers thereof or
the underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes or Exchange Notes, except as may be required
solely as a consequence of the nature of such selling Holder’s business,
in which case the Company will cooperate in all reasonable respects with
the filing of such Registration Statement and the granting of such
approvals.

-13-

 

    (k) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by Section 5(c)(v) or 5(c)(vi)
hereof, as promptly as practicable prepare and (subject to Section 5(a)
and the penultimate paragraph of this Section 5) file with the
Commission, at the sole expense of the Company, a supplement or
post-effective amendment to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes
being sold thereunder or to the purchasers of the Exchange Notes to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

    (l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.

    (m) In connection with any underwritten offering of Registrable
Notes pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes in form reasonably satisfactory to the
Issuers and take all such other actions as are reasonably requested by
the managing underwriter or underwriters, if any, in order to expedite or
facilitate the registration or the disposition of such Registrable Notes
and, in such connection, (i) make such representations and warranties to,
and covenants with, the underwriters with respect to the business of the
Issuers and their subsidiaries (including any acquired business,
properties or entity, if applicable) and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of debt securities
similar to the Notes, and confirm the same in writing if and when
requested in form reasonably satisfactory to the Issuers; (ii) upon the
request of any underwriter, use their reasonable best efforts to obtain
the written opinions of counsel to the Company and written updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by the managing underwriter or underwriters; (iii) upon the
request of any underwriter, use their reasonable best efforts to obtain
“cold comfort” letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary
form and covering matters of the type customarily covered in “cold
comfort” letters in connection with underwritten offerings of debt
securities similar to the Notes, and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered

-14-

 

into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority
in aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or
agents, if any) with respect to all parties to be indemnified pursuant to
said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.

    (n) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to
be delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable Notes
being sold or each such Participating Broker-Dealer, as the case may be,
any underwriter participating in any such disposition of Registrable
Notes, if any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the “Inspectors”), at the
offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
instruments of the Company and its subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the appropriate
officers, directors and employees of the Company and its subsidiaries to
supply all information reasonably requested by any such Inspector in
connection with such Registration Statement and Prospectus. Each
Inspector shall agree in writing that it will keep the Records
confidential and not disclose any Records that the Company determines, in
good faith, to be confidential and that it notifies the Inspectors in
writing are confidential unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
Registration Statement or Prospectus, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is necessary or
advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector
and arising out of, based upon, relating to, or involving this Agreement
or the Purchase Agreement, or any transactions contemplated hereby or
thereby or arising hereunder or thereunder, or (iv) the information in
such Records has been made generally available to the public other than
through an act of such Inspector in violation of this Section 5(n);
provided, however, that, if practicable, prior notice shall be provided
as soon as practicable to the Issuers of the potential disclosure of any
information by such Inspector pursuant to clause (ii) of this sentence to
permit the Issuers to obtain a protective order or to take other
appropriate action to prevent the disclosure of such information and that
such Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to the
extent such action is otherwise not inconsistent with, an impairment of
or in derogation of the rights and interests of the Holder or any
Inspector.

    (o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(b) hereof to be qualified under the
TIA not later than the effective date of the Exchange Offer or the first
Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Registrable Notes or Exchange Notes, as
applicable, to effect such changes to such indenture as may be required
for such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such

-15-

 

changes, and all other forms and documents required to be filed with
the Commission to enable such indenture to be so qualified in a timely
manner.

    (p) Comply with all applicable rules and regulations of the
Commission and make generally available to the Company’s securityholders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) (i) commencing at the end of any fiscal quarter
in which Registrable Notes or Exchange Notes are sold to underwriters in
a firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement.

    (q) Upon the request of a Holder, upon consummation of the Exchange
Offer or a Private Exchange, use their reasonable best efforts to obtain
an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of
all Holders of Registrable Notes participating in the Exchange Offer or
the Private Exchange, as the case may be, that the Exchange Notes or
Private Exchange Notes, as the case may be, and the related indenture
constitute legal, valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with its respective terms,
subject to customary exceptions and qualifications.

    (r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company (or to such other Person as directed by the Company) in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being cancelled in exchange for the Exchange Notes
or the Private Exchange Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.

    (s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the “NASD”).

    (t) Use their reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Exchange Notes
and/or Registrable Notes covered by a Registration Statement contemplated
hereby.

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

-16-

 

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

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

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

     Section 6. Registration Expenses

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

-17-

 

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

     Section 7. Indemnification

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

-18-

 

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

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

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

-19-

 

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 Purchaser 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 Purchaser (net of discounts and commissions but before
deducting expenses) received by the Issuers are to (y) the total net profit
received by such Participant in connection with the sale of the Registrable
Notes. The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or such Participant and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.

-20-

 

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

     Section 8. Rules 144 and 144A

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

     Section 9. Underwritten Registrations

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

-21-

 

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

     Section 10. Miscellaneous

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

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

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

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

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

-22-

 

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

Meritage Corporation

8501 East Princess Drive

Suite 290

Scottsdale, Arizona 85255

Telephone: (480) 609-3330

Fax: (480) 998-9178

Attention: Larry W. Seay

          With a copy to:

Snell & Wilmer L.L.P.

One Arizona Center

400 E. Van Buren Street

Phoenix, Arizona 85004-2223

Telephone: (602) 382-6000

Fax: (602) 382-6070

Attention: Steven D. Pidgeon, Esq.

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

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Facsimile No.: (212) 816-7912

Attention: Legal 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 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.

-23-

 

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

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

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

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

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

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

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

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

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

-24-

 

          (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 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
	 
	 	 	 	 
	 	 	HANCOCK-MTH BUILDERS, INC.
	 
	 	 	 	 
	

	 	By:
	 	          /s/ Larry W. Seay
	

	 	 	 	
 
	

	 	 	 	Name: Larry W. Seay
	

	 	 	 	Title: Vice President-Secretary
	 
	 	 	 	 
	 	 	HANCOCK-MTH COMMUNITIES, 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

S-3

 

	 	 	 	 	 
	

	 	By:
	 	MTH-Texas GP, Inc., its General Partner
	 
	 	 	 	 
	

	 	By:
	 	          /s/ Larry W. Seay
	

	 	 	 	
 
	

	 	 	 	Name: Larry W. Seay
	

	 	 	 	Title: Vice President-Secretary
	 
	 	 	 	 
	 	 	MERITAGE HOLDINGS, L.L.C.
	 
	 	 	 	 
	

	 	By:
	 	Legacy/Monterey Homes L.P., its Sole Member
	 
	 	 	 	 
	

	 	By:
	 	MTH-Texas GP, Inc., its General Partner
	 
	 	 	 	 
	

	 	By:
	 	          /s/ Larry W. Seay
	

	 	 	 	
 
	

	 	 	 	Name: Larry W. Seay
	

	 	 	 	Title: 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

S-4

 

	 	 	 	 	 
	 	 	MTH-HOMES NEVADA, INC.
	 
	 	 	 	 
	

	 	By:
	 	          /s/ Larry W. Seay
	

	 	 	 	
 
	

	 	 	 	Name: Larry W. Seay
	

	 	 	 	Title: Vice President-Secretary
	 
	 	 	 	 
	 	 	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:
	 	Hancock-MTH Builders. 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

S-6

 

	 	 	 	 	 
	 	 	CITIGROUP GLOBAL MARKETS INC.
	 
	 	 	 	 
	

	 	By:
	 	          /s/ Michael S. Weiss
	

	 	 	 	
 
	

	 	 	 	Name: Michael S. Weiss
	

	 	 	 	Title: Vice President

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.	 	Hancock-MTH Builders, Inc.
	 
	12.	 	Hancock-MTH Communities, Inc.
	 
	13.	 	Legacy Operating Company, L.P.
	 
	14.	 	Hulen Park Venture, LLC
	 
	15.	 	Meritage Holdings, L.L.C.
	 
	16.	 	MTH-Texas GP II, Inc.
	 
	17.	 	MTH Homes-Texas, L.P.
	 
	18.	 	MTH-Texas LP II, Inc.
	 
	19.	 	MTH-Homes Nevada, Inc.
	 
	20.	 	MTH-Cavalier, LLC
	 
	21.	 	MTH Golf, LLC
	 
	22.	 	Legacy-Hammonds Materials, L.P.EXHIBIT 4.1

                               GLOBAL LINKS CORP.
              EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2004 NO. 2

     1.     General  Provisions.
            -------------------

     1.1     Purpose.  This  Stock  Incentive  Plan  (the "Plan") is intended to
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allow  designated officers and employees (all of whom are sometimes collectively
referred  to  herein  as  the "Employees," or individually as the "Employee") of
Global  Links  Corp.,  a Nevada corporation (the "Company") and its Subsidiaries
(as  that  term  is  defined  below)  which they may have from time to time (the
Company  and  such  Subsidiaries  are  referred  to  herein as the "Company") to
receive  certain  options  (the "Stock Options") to purchase common stock of the
Company,  par value $0.001 per share (the "Common Stock"), and to receive grants
of  the Common Stock subject to certain restrictions (the "Awards").  As used in
this  Plan,  the  term  "Subsidiary"  shall  mean  each  corporation  which is a
"subsidiary  corporation" of the Company within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code").  The purpose of this
Plan  is  to  provide  the  Employees,  who  make  significant and extraordinary
contributions  to  the  long-term  growth  and  performance of the Company, with
equity-based  compensation  incentives, and to attract and retain the Employees.

     1.2     Administration.
             --------------

     1.2.1     The Plan shall be administered by the Compensation Committee (the
"Committee")  of,  or  appointed  by, the Board of Directors of the Company (the
"Board").  The  Committee  shall select one of its members as Chairman and shall
act  by  vote  of  a  majority  of a quorum, or by unanimous written consent.  A
majority  of  its  members  shall  constitute  a quorum.  The Committee shall be
governed  by the provisions of the Company's Bylaws and of Nevada law applicable
to  the  Board,  except as otherwise provided herein or determined by the Board.

     1.2.2     The  Committee  shall  have  full  and complete authority, in its
discretion,  but  subject  to the express provisions of this Plan (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock  Options;  (b)  to  determine  the number of Awards or Stock Options to be
granted  to  an  Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; to establish the terms and conditions upon which
Awards  or  Stock  Options  may  be  exercised;  (d)  to  remove  or  adjust any
restrictions and conditions upon Awards or Stock Options; (e) to specify, at the
time  of  grant,  provisions  relating to exercisability of Stock Options and to
accelerate  or otherwise modify the exercisability of any Stock Options; and (f)
to  adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan.  All interpretations
and  constructions  of  this  Plan  by  the  Committee,  and  all of its actions
hereunder,  shall  be  binding  and  conclusive on all persons for all purposes.

     1.2.3     The  Company  hereby  agrees  to indemnify and hold harmless each
Committee  member  and each Employee, and the estate and heirs of such Committee
member  or  Employee,  against  all  claims,  liabilities,  expenses, penalties,
damages  or  other  pecuniary losses, including legal fees, which such Committee
member  or  Employee,  his  estate  or  heirs  may  suffer  as  a  result of his
responsibilities,  obligations  or  duties  in connection with this Plan, to the
extent  that  insurance,  if  any, does not cover the payment of such items.  No
member  of  the  Committee  or  the  Board  shall  be  liable  for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option  granted  pursuant  to  this  Plan.

     1.3     Eligibility  and  Participation.  The Employees eligible under this
             -------------------------------
Plan shall be approved by the Committee from those Employees who, in the opinion
of  the  management  of  the Company, are in positions which enable them to make
significant  contributions  to  the  long-term  performance  and  growth  of the
Company.  In  selecting  the  Employees  to  whom  Award or Stock Options may be
granted,  consideration  shall  be given to factors such as employment position,
duties  and  responsibilities, ability, productivity, length of service, morale,
interest  in  the  Company  and  recommendations  of  supervisors.

     1.4     Shares  Subject  to this Plan.  The maximum number of shares of the
             -----------------------------
Common  Stock  that  may  be  issued  pursuant  to this Plan shall be 90,000,000
subject to adjustment pursuant to the provisions of Paragraph 4.1.  If shares of
the Common Stock awarded or issued under this Plan are reacquired by the Company
due  to a forfeiture

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or  for  any  other  reason, such shares shall be cancelled and thereafter shall
again  be  available  for  purposes  of  this  Plan.  If a Stock Option expires,
terminates or is cancelled for any reason without having been exercised in full,
the shares of the Common Stock not purchased thereunder shall again be available
for  purposes  of  this  Plan. In the event that any outstanding Stock Option or
Award  under  this  Plan  for any reason expires or is terminated, the shares of
Common  Stock  allocable to the unexercised portion of the Stock Option or Award
shall  be  available  for  issuance  under  the  Global  Links Corp.Non-Employee
Directors and Consultants Retainer Stock Plan for the Year 2004 No. 2.

     2.     Provisions  Relating  to  Stock  Options.
            ----------------------------------------

     2.1     Grants  of Stock Options.  The Committee may grant Stock Options in
             ------------------------
such amounts, at such times, and to the Employees nominated by the management of
the  Company  as the Committee, in its discretion, may determine.  Stock Options
granted  under  this  Plan shall constitute "incentive stock options" within the
meaning  of  Section  422  of the Code, if so designated by the Committee on the
date  of  grant.  The  Committee  shall  also have the discretion to grant Stock
Options  which  do  not  constitute  incentive stock options, and any such Stock
Options  shall be designated non-statutory stock options by the Committee on the
date  of  grant.  The  aggregate Fair Market Value (determined as of the time an
incentive  stock  option  is  granted) of the Common Stock with respect to which
incentive  stock  options  are  exercisable  for  the first time by any Employee
during  any  one calendar year (under all plans of the Company and any parent or
subsidiary  of  the  Company)  may not exceed the maximum amount permitted under
Section  422  of the Code (currently, $100,000.00).  Non-statutory stock options
shall  not  be  subject  to  the limitations relating to incentive stock options
contained  in the preceding sentence.  Each Stock Option shall be evidenced by a
written  agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to whom the
Stock  Option is granted, and which shall be subject to the terms and conditions
of  this  Plan.  In  the  discretion of the Committee, Stock Options may include
provisions  (which  need  not  be  uniform),  authorized by the Committee in its
discretion,  that  accelerate  an  Employee's  rights  to exercise Stock Options
following  a  "Change in Control," upon termination of the Employee's employment
by  the  Company  without  "Cause" or by the Employee for "Good Reason," as such
terms  are  defined in Paragraph 3.1 hereof.  The holder of a Stock Option shall
not  be  entitled  to  the privileges of stock ownership as to any shares of the
Common  Stock  not  actually  issued  to  such  holder.

     2.2     Purchase  Price.  The  purchase  price  (the  "Exercise  Price") of
             ---------------
shares  of  the  Common Stock subject to each Stock Option (the "Option Shares")
shall  not  be less than 85 percent of the Fair Market Value of the Common Stock
on the date of exercise.  For an Employee holding greater than 10 percent of the
total  voting power of all stock of the Company, either Common or Preferred, the
Exercise Price of an incentive stock option shall be at least 110 percent of the
Fair  Market  Value  of the Common Stock on the date of the grant of the option.
As  used  herein,  "Fair  Market  Value"  means the mean between the highest and
lowest  reported sales prices of the Common Stock on the New York Stock Exchange
Composite  Tape  or,  if  not  listed  on  such  exchange, on any other national
securities  exchange  on which the Common Stock is listed or on The Nasdaq Stock
Market,  or,  if  not so listed on any other national securities exchange or The
Nasdaq  Stock  Market,  then  the  average  of the bid price of the Common Stock
during  the  last  five  trading  days  on  the  OTC  Bulletin Board immediately
preceding  the last trading day prior to the date with respect to which the Fair
Market  Value  is  to  be  determined.  If the Common Stock is not then publicly
traded,  then  the Fair Market Value of the Common Stock shall be the book value
of  the  Company  per  share  as  determined  on  the  last  day of March, June,
September, or December in any year closest to the date when the determination is
to  be  made.  For  the  purpose of determining book value hereunder, book value
shall  be  determined  by adding as of the applicable date called for herein the
capital,  surplus,  and  undivided  profits  of  the  Company,  and after having
deducted  any  reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said date,
and  the  quotient thus obtained shall represent the book value of each share of
the  Common  Stock  of  the  Company.

     2.3     Option Period.  The Stock Option period (the "Term") shall commence
             -------------
on  the  date of grant of the Stock Option and shall be 10 years or such shorter
period  as is determined by the Committee.  Each Stock Option shall provide that
it  is  exercisable over its term in such periodic installments as the Committee
may  determine,  subject to the provisions of Paragraph 2.4.1.  Section 16(b) of
the  Securities  Exchange  Act  of 1934, as amended (the "Exchange Act") exempts
persons  normally  subject to the reporting requirements of Section 16(a) of the
Exchange  Act  (the  "Section  16  Reporting  Persons")  pursuant to a qualified
employee  stock  option plan from the normal requirement of not selling until at
least six months and one day from the date the Stock Option is granted.

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     2.4     Exercise  of  Options.
             ---------------------

     2.4.1     Each  Stock  Option may be exercised in whole or in part (but not
as  to  fractional  shares) by delivering it for surrender or endorsement to the
Company,  attention  of  the Corporate Secretary, at the principal office of the
Company,  together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by Paragraph 2.4.2.  Payment may be
made  (a)  in  cash,  (b)  by  cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from  the  Option  Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock  Option,  if  such  withholding  is  authorized  by  the  Committee in its
discretion,  or  (e)  in the discretion of the Committee, by the delivery to the
Company  of the optionee's promissory note secured by the Option Shares, bearing
interest  at  a  rate  sufficient  to  prevent  the imputation of interest under
Sections  483 or 1274 of the Code, and having such other terms and conditions as
may  be  satisfactory  to  the  Committee.  Subject  to  the  provisions of this
Paragraph  2.4  and Paragraph 2.5, the Employee has the right to exercise his or
her  Stock  Options  at the rate of at least 20 percent per year over five years
from  the  date  the  Stock  Option  is  granted.

     2.4.2     Exercise  of  each Stock Option is conditioned upon the agreement
of  the  Employee  to  the  terms  and conditions of this Plan and of such Stock
Option  as  evidenced  by  the Employee's execution and delivery of a Notice and
Agreement  of  Exercise  in  a  form  to  be  determined by the Committee in its
discretion.  Such Notice and Agreement of Exercise shall set forth the agreement
of  the Employee that (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933, as amended (the "Securities Act") or
any  other  applicable  federal  or state securities laws, (b) each Option Share
certificate  may be imprinted with legends reflecting any applicable federal and
state  securities  law  restrictions  and conditions, (c) the Company may comply
with  said securities law restrictions and issue "stop transfer" instructions to
its  Transfer  Agent  and  Registrar without liability, (d) if the Employee is a
Section  16 Reporting Person, the Employee will furnish to the Company a copy of
each  Form  4  or Form 5 filed by said Employee and will timely file all reports
required  under  federal  securities  laws, and (e) the Employee will report all
sales  of  Option  Shares  to the Company in writing on a form prescribed by the
Company.

     2.4.3     No  Stock  Option  shall  be  exercisable  unless  and  until any
applicable  registration  or  qualification  requirements  of  federal and state
securities  laws,  and  all  other  legal requirements, have been fully complied
with.  At no time shall the total number of securities issuable upon exercise of
all  outstanding  options  under  this  Plan, and the total number of securities
provided  for under any bonus or similar plan or agreement of the Company exceed
a  number  of  securities  which  is equal to 30 percent of the then outstanding
securities  of  the  Company,  unless  a  percentage  higher  than 30 percent is
approved  by at least two-thirds of the outstanding securities entitled to vote.
The  Company  will  use  reasonable  efforts  to maintain the effectiveness of a
Registration  Statement  under  the  Securities  Act  for  the issuance of Stock
Options  and  shares  acquired  thereunder,  but there may be times when no such
Registration  Statement  will  be  currently  effective.  The  exercise of Stock
Options  may  be  temporarily  suspended without liability to the Company during
times  when  no  such  Registration  Statement is currently effective, or during
times  when,  in  the  reasonable  opinion  of the Committee, such suspension is
necessary  to  preclude  violation  of  any  requirements  of  applicable law or
regulatory  bodies  having  jurisdiction  over the Company.  If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then  if  exercise  of such Stock Option is duly tendered before its expiration,
such  Stock  Option  shall  be  exercisable  and exercised (unless the attempted
exercise  is  withdrawn)  as  of the first day after the end of such suspension.
The Company shall have no obligation to file any Registration Statement covering
resales  of  Option  Shares.

     2.5     Continuous  Employment.  Except as provided in Paragraph 2.7 below,
             ----------------------
an Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company.
For  purposes  of  this Paragraph 2.5, the period of continuous employment of an
Employee with the Company shall be deemed to include (without extending the term
of the Stock Option) any period during which the Employee is on leave of absence
with  the  consent of the Company, provided that such leave of absence shall not
exceed  three  months and that the Employee returns to the employ of the Company
at  the expiration of such leave of absence.  If the Employee fails to return to
the  employ  of  the  Company  at  the  expiration of such leave of absence, the
Employee's employment with the Company shall be deemed terminated as of the date
such  leave of absence commenced.  The continuous employment of an Employee with
the Company shall also be deemed to include any period during which the Employee
is  a  member  of  the  Armed  Forces  of  the  United  States,

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provided  that  the Employee returns to the employ of the Company within 90 days
(or  such  longer period as may be prescribed by law) from the date the Employee
first becomes entitled to a discharge from military service. If an Employee does
not return to the employ of the Company within 90 days (or such longer period as
may be prescribed by law) from the date the Employee first becomes entitled to a
discharge  from  military  service,  the  Employee's employment with the Company
shall  be  deemed  to  have  terminated  as  of the date the Employee's military
service  ended.

     2.6     Restrictions  on  Transfer.  Each  Stock  Option granted under this
             --------------------------
Plan shall be transferable only by will or the laws of descent and distribution.
No  interest  of  any  Employee  under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or  equitable  process.  Each  Stock  Option  granted  under  this Plan shall be
exercisable  during  an  Employee's  lifetime  only  by  the  Employee or by the
Employee's  legal  representative.

     2.7     Termination  of  Employment.
             ---------------------------

     2.7.1     Upon  an  Employee's  Retirement,  Disability  (both  terms being
defined  below)  or  death,  (a)  all Stock Options to the extent then presently
exercisable  shall remain in full force and effect and may be exercised pursuant
to  the  provisions thereof, and (b) unless otherwise provided by the Committee,
all  Stock  Options to the extent not then presently exercisable by the Employee
shall  terminate  as of the date of such termination of employment and shall not
be  exercisable  thereafter.  Unless  employment  is  terminated  for  cause, as
defined  by applicable law, the right to exercise in the event of termination of
employment,  to the extent that the optionee is entitled to exercise on the date
the  employment  terminates  as  follows:

          (i)     At  least  six  months  from  the  date  of  termination  if
termination  was  caused  by  death  or  disability.

          (ii)     At  least 30 days from the date of termination if termination
was  caused  by  other  than  death  or  disability.

     2.7.2     Upon  the  termination  of  the employment of an Employee for any
reason other than those specifically set forth in Paragraph 2.7.1, (a) all Stock
Options  to  the  extent then presently exercisable by the Employee shall remain
exercisable  only  for a period of 90 days after the date of such termination of
employment  (except that the 90 day period shall be extended to 12 months if the
Employee  shall die during such 90 day period), and may be exercised pursuant to
the  provisions  thereof,  including  expiration  at  the  end of the fixed term
thereof,  and  (b) unless otherwise provided by the Committee, all Stock Options
to  the extent not then presently exercisable by the Employee shall terminate as
of  the  date  of  such  termination  of employment and shall not be exercisable
thereafter.

     2.7.3     For  purposes  of  this  Plan:

          (a)     "Retirement"  shall  mean  an  Employee's  retirement from the
employ of the Company on or after the date on which the Employee attains the age
of  65  years;  and

          (b)     "Disability"  shall  mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental incompetence,
to perform the usual duties of the Employee's employment with the Company, which
disability  shall  be determined (i) on medical evidence by a licensed physician
designated  by  the  Committee, or (ii) on evidence that the Employee has become
entitled  to  receive  primary  benefits as a disabled employee under the Social
Security  Act  in  effect  on  the  date  of  such  disability.

     3.     Provisions  Relating  to  Awards.
            --------------------------------

     3.1     Grant  of  Awards.  Subject  to  the  provisions  of this Plan, the
             -----------------
Committee shall have full and complete authority, in its discretion, but subject
to  the  express  provisions  of this Plan, to (1) grant Awards pursuant to this
Plan,  (2)  determine  the  number of shares of the Common Stock subject to each
Award  (the  "Award Shares"), (3) determine the terms and conditions (which need
not  be  identical)  of  each  Award,  including  the  consideration  (if

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any)  to  be  paid  by  the  Employee  for  such Common Stock, which may, in the
Committee's  discretion,  consist  of  the delivery of the Employee's promissory
note  meeting  the  requirements  of  Paragraph  2.4.1, (4) establish and modify
performance  criteria  for  Awards,  and  (5)  make  all  of  the determinations
necessary  or advisable with respect to Awards under this Plan. Each Award under
this  Plan  shall  consist of a grant of shares of the Common Stock subject to a
restriction  period (after which the restrictions shall lapse), which shall be a
period  commencing  on  the date the Award is granted and ending on such date as
the  Committee  shall  determine  (the  "Restriction Period"). The Committee may
provide  for  the lapse of restrictions in installments, for acceleration of the
lapse  of  restrictions  upon  the  satisfaction  of  such  performance or other
criteria or upon the occurrence of such events as the Committee shall determine,
and for the early expiration of the Restriction Period upon an Employee's death,
Disability  or  Retirement as defined in Paragraph 2.7.3, or, following a Change
of  Control, upon termination of an Employee's employment by the Company without
"Cause" or by the Employee for "Good Reason," as those terms are defined herein.
For  purposes  of  this  Plan:

     "Change  of  Control"  shall be deemed to occur (a) on the date the Company
first  has  actual  knowledge  that any person (as such term is used in Sections
13(d)  and  14(d)(2)  of  the  Exchange Act) has become the beneficial owner (as
defined  in  Rule  13(d)-3  under  the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power  of  the  Company's  then  outstanding  securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other  corporation  in  which the Company is not the surviving corporation or in
which  the  Company  survives  as  a  subsidiary  of another corporation, (ii) a
consolidation  of  the  Company with any other corporation, or (iii) the sale or
disposition  of  all  or  substantially all of the Company's assets or a plan of
complete  liquidation.

     "Cause,"  when  used  with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:

               (a)     The  Employee's continuing willful and material breach of
his duties to the Company after he receives a demand from the Chief Executive of
the  Company  specifying  the  manner  in  which he has willfully and materially
breached  such  duties, other than any such failure resulting from Disability of
the Employee or his resignation for "Good Reason," as defined herein; or

               (b)     The  conviction  of  the  Employee  of  a  felony;  or

               (c)     The  Employee's  commission of fraud in the course of his
employment  with  the  Company,  such  as  embezzlement  or  other  material and
intentional violation of law against the Company; or

               (d)     The  Employee's gross misconduct causing material harm to
the  Company.

     "Good  Reason"  shall  mean  any  one  or  more of the following, occurring
following  or in connection with a Change of Control and within 90 days prior to
the  Employee's resignation, unless the Employee shall have consented thereto in
writing:

               (a)     The  assignment  to  the  Employee of duties inconsistent
with his executive status prior to the Change of Control or a substantive change
in  the  officer  or officers to whom he reports from the officer or officers to
whom he reported immediately prior to the Change of Control; or

               (b)     The  elimination  or  reassignment  of  a majority of the
duties and responsibilities that were assigned to the Employee immediately prior
to the Change of Control; or

               (c)     A  reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or

               (d)     The  Company  requiring the Employee to be based anywhere
outside  a  35-mile radius from his place of employment immediately prior to the
Change  of  Control,  except for required travel on the Company's business to an
extent  substantially consistent with the Employee's business travel obligations
immediately  prior  to  the  Change  of  Control;  or

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<PAGE>
               (e)     The  failure  of  the  Company  to  grant  the Employee a
performance  bonus  reasonably  equivalent  to the same percentage of salary the
Employee  normally  received  prior  to  the Change of Control, given comparable
performance by the Company and the Employee; or

               (f)     The  failure  of  the  Company  to  obtain a satisfactory
Assumption  Agreement  (as  defined  in  Paragraph  4.13  of  this  Plan) from a
successor,  or  the  failure  of  such  successor  to  perform  such  Assumption
Agreement.

     3.2     Incentive  Agreements.  Each Award granted under this Plan shall be
             ---------------------
evidenced  by  a written agreement (an "Incentive Agreement") in a form approved
by  the Committee and executed by the Company and the Employee to whom the Award
is  granted.  Each  Incentive  Agreement  shall  be  subject  to  the  terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.

     3.3     Amendment,  Modification and Waiver of Restrictions.  The Committee
             ---------------------------------------------------
may  modify  or  amend  any  Award  under this Plan or waive any restrictions or
conditions  applicable  to  the Award; provided, however, that the Committee may
not  undertake  any  such  modifications,  amendments  or  waivers if the effect
thereof  materially increases the benefits to any Employee, or adversely affects
the  rights  of  any  Employee  without  his  consent.

     3.4     Terms and Conditions of Awards.  Upon receipt of an Award of shares
             ------------------------------
of  the  Common  Stock  under  this Plan, even during the Restriction Period, an
Employee  shall  be  the  holder  of record of the shares and shall have all the
rights  of  a  stockholder with respect to such shares, subject to the terms and
conditions  of  this  Plan  and  the  Award.

     3.4.1     Except  as otherwise provided in this Paragraph 3.4, no shares of
the  Common  Stock  received  pursuant  to  this  Plan shall be sold, exchanged,
transferred,  pledged,  hypothecated  or  otherwise  disposed  of  during  the
Restriction Period applicable to such shares.  Any purported disposition of such
Common  Stock  in  violation  of  this  Paragraph  3.4  shall  be null and void.

     3.4.2     If  an Employee's employment with the Company terminates prior to
the expiration of the Restriction Period for an Award, subject to any provisions
of  the Award with respect to the Employee's death, Disability or Retirement, or
Change  of Control, all shares of the Common Stock subject to the Award shall be
immediately  forfeited  by  the  Employee and reacquired by the Company, and the
Employee  shall  have  no  further  rights  with  respect  to the Award.  In the
discretion  of  the Committee, an Incentive Agreement may provide that, upon the
forfeiture  by  an  Employee  of  Award  Shares,  the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award Shares
on  the  grant  of  the Award.  In the discretion of the Committee, an Incentive
Agreement  may also provide that such repayment shall include an interest factor
on  such  consideration  from  the date of the grant of the Award to the date of
such  repayment.

     3.4.3     The  Committee  may require under such terms and conditions as it
deems  appropriate  or  desirable that (a) the certificates for the Common Stock
delivered  under  this Plan are to be held in custody by the Company or a person
or  institution  designated by the Company until the Restriction Period expires,
(b)  such  certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the  Company  a  stock  power  endorsed  in  blank relating to the Common Stock.

     4.     Miscellaneous  Provisions.
            -------------------------

     4.1     Adjustments  Upon  Change  in  Capitalization.
             ---------------------------------------------

     4.1.1     The  number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (but not the total price), the maximum number
of  Stock  Options  that  may  be granted under this Plan, the minimum number of
shares  as  to  which  a  Stock Option may be exercised at any one time, and the
number  and  class  of  shares  subject  to  each  outstanding  Award,  shall be
proportionately  adjusted in the event of any increase or decrease in the number
of  the  issued  shares  of  the  Common  Stock which results from a split-up or
consolidation  of  shares,  payment of a stock dividend or dividends exceeding a
total of five percent for which the record dates occur in any one fiscal year, a
recapitalization  (other than the conversion of convertible securities according
to  their

                                        6
<PAGE>
terms),  a  combination  of shares or other like capital adjustment, so that (a)
upon  exercise  of  the  Stock Option, the Employee shall receive the number and
class  of  shares  the  Employee  would  have received had the Employee been the
holder of the number of shares of the Common Stock for which the Stock Option is
being  exercised  upon  the  date  of such change or increase or decrease in the
number  of  issued shares of the Company, and (b) upon the lapse of restrictions
of  the  Award Shares, the Employee shall receive the number and class of shares
the  Employee  would  have  received if the restrictions on the Award Shares had
lapsed  on  the  date  of  such  change or increase or decrease in the number of
issued  shares  of  the  Company.

     4.1.2     Upon  a  reorganization,  merger  or consolidation of the Company
with  one  or  more  corporations  as  a  result of which the Company is not the
surviving  corporation  or  in  which  the  Company  survives  as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the  property  of  the  Company  to  another  corporation,  or  any  dividend or
distribution  to  stockholders  of more than 10 percent of the Company's assets,
adequate  adjustment  or  other provisions shall be made by the Company or other
party  to  such transaction so that there shall remain and/or be substituted for
the  Option  Shares and Award Shares provided for herein, the shares, securities
or assets which would have been issuable or payable in respect of or in exchange
for  such  Option Shares and Award Shares then remaining, as if the Employee had
been  the  owner  of  such  shares as of the applicable date.  Any securities so
substituted shall be subject to similar successive adjustments.

     4.2     Withholding Taxes.  The Company shall have the right at the time of
             -----------------
exercise  of  any  Stock  Option,  the  grant  of  an  Award,  or  the  lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local  or  foreign  taxes  which it believes are or may be required by law to be
withheld  with  respect  to  such  exercise (the "Tax Liability"), to ensure the
payment  of  any such Tax Liability.  The Company may provide for the payment of
any  Tax Liability by any of the following means or a combination of such means,
as  determined  by  the  Committee  in  its  sole and absolute discretion in the
particular  case  (1)  by requiring the Employee to tender a cash payment to the
Company,  (2) by withholding from the Employee's salary, (3) by withholding from
the  Option  Shares which would otherwise be issuable upon exercise of the Stock
Option,  or  from  the  Award  Shares  on  their  grant  or  date  of  lapse  of
restrictions,  that  number of Option Shares or Award Shares having an aggregate
Fair  Market  Value (determined in the manner prescribed by Paragraph 2.2) as of
the  date  the  withholding tax obligation arises in an amount which is equal to
the  Employee's  Tax  Liability or (4) by any other method deemed appropriate by
the  Committee.  Satisfaction  of  the  Tax  Liability of a Section 16 Reporting
Person  may  be made by the method of payment specified in clause (3) above only
if  the  following  two  conditions  are  satisfied:

               (a)     The  withholding of Option Shares or Award Shares and the
exercise  of  the  related  Stock  Option  occur at least six months and one day
following the date of grant of such Stock Option or Award; and

               (b)     The  withholding of Option Shares or Award Shares is made
either (i) pursuant to an irrevocable election (the "Withholding Election") made
by  the  Employee  at  least six months in advance of the withholding of Options
Shares  or  Award  Shares,  or  (ii)  on  a  day within a 10-day "window period"
beginning  on  the  third  business  day  following  the  date of release of the
Company's  quarterly  or  annual  summary  statement  of  sales  and  earnings.

     Anything herein to the contrary notwithstanding, a Withholding Election may
be  disapproved  by  the  Committee  at  any  time.

     4.3     Relationship  to  Other  Employee Benefit Plans.  Stock Options and
             -----------------------------------------------
Awards  granted hereunder shall not be deemed to be salary or other compensation
to  any  Employee  for  purposes  of  any pension, thrift, profit-sharing, stock
purchase  or any other employee benefit plan now maintained or hereafter adopted
by  the  Company.

     4.4     Amendments and Termination.  The Board of Directors may at any time
             --------------------------
suspend,  amend  or  terminate  this  Plan.  No amendment, except as provided in
Paragraph  3.3,  or  modification of this Plan may be adopted, except subject to
stockholder  approval, which would (1) materially increase the benefits accruing
to  the  Employees  under  this  Plan,  (2)  materially  increase  the number of
securities  which may be issued under this Plan (except for adjustments pursuant
to  Paragraph  4.1  hereof),  or  (3)  materially  modify the requirements as to
eligibility  for  participation  in  this  Plan.

                                        7
<PAGE>
     4.5     Successors  in  Interest.  The  provisions  of  this  Plan  and the
             ------------------------
actions of the Committee shall be binding upon all heirs, successors and assigns
of  the  Company  and  of  the  Employees.

     4.6     Other  Documents.  All documents prepared, executed or delivered in
             ----------------
connection  with this Plan (including, without limitation, Option Agreements and
Incentive  Agreements)  shall  be,  in  substance  and  form, as established and
modified  by  the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this  Plan  shall  prevail.

     4.7     Fairness  of  the  Repurchase Price.  In the event that the Company
             -----------------------------------
repurchases  securities  upon  termination  of employment pursuant to this Plan,
either:  (a)  the  price  will  not  be  less  than the fair market value of the
securities  to  be repurchased on the date of termination of employment, and the
right to repurchase will be exercised for cash or cancellation of purchase money
indebtedness  for the securities within 90 days of termination of the employment
(or  in the case of securities issued upon exercise of options after the date of
termination,  within  90  days  after  the  date of the exercise), and the right
terminates  when the Company's securities become publicly traded, or (b) Company
will  repurchase  securities  at  the original purchase price, provided that the
right  to  repurchase  at  the  original purchase price lapses at the rate of at
least  20  percent  of the securities per year over five years from the date the
option  is  granted  (without  respect  to  the date the option was exercised or
became  exercisable)  and  the right to repurchase must be exercised for cash or
cancellation of purchase money indebtedness for the securities within 90 days of
termination  of  employment  (or  in  case of securities issued upon exercise of
options  after  the  date  of  termination, within 90 days after the date of the
exercise).

     4.8     No  Obligation  to  Continue  Employment.  This Plan and the grants
             ----------------------------------------
which  might be made hereunder shall not impose any obligation on the Company to
continue  to  employ  any  Employee.  Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any  way  by any employment contract between an Employee (or other employee) and
the  Company.

     4.9     Misconduct  of an Employee.  Notwithstanding any other provision of
             --------------------------
this  Plan,  if  an  Employee  commits fraud or dishonesty toward the Company or
wrongfully  uses  or  discloses  any  trade  secret,  confidential data or other
information  proprietary to the Company, or intentionally takes any other action
which  results  in material harm to the Company, as determined by the Committee,
in  its  sole and absolute discretion, the Employee shall forfeit all rights and
benefits  under  this  Plan.

     4.10     Term  of  Plan.  No  Stock  Option  shall be exercisable, or Award
              --------------
granted,  unless  and until the Directors of the Company have approved this Plan
and  all  other  legal requirements have been met.  This Plan was adopted by the
Board effective April 16, 2004.  No Stock Options or Awards may be granted under
this  Plan  after  April  16,  2014.

     4.11     Governing  Law.  This  Plan and all actions taken thereunder shall
              --------------
be  governed  by,  and  construed  in  accordance with, the laws of the State of
Nevada.

     4.12     Approval.  This  Plan  must  be  approved  by  a  majority  of the
              --------
outstanding  securities  entitled  to vote within 12 months before or after this
Plan  is  adopted  or  the  date  the agreement is entered into.  Any securities
purchased  before  security  holder  approval  is  obtained must be rescinded if
security  holder  approval is not obtained within 12 months before or after this
Plan  is  adopted  or  the  date the agreement is entered into.  Such securities
shall not be counted in determining whether such approval is obtained.

     4.13     Assumption  Agreements.  The  Company will require each successor,
              ----------------------
(direct  or  indirect, whether by purchase, merger, consolidation or otherwise),
to  all  or substantially all of the business or assets of the Company, prior to
the  consummation  of  each such transaction, to assume and agree to perform the
terms  and  provisions  remaining  to  be  performed  by  the Company under each
Incentive  Agreement  and  Stock  Option  and  to  preserve  the benefits to the
Employees  thereunder.  Such  assumption  and  agreement shall be set forth in a
written  agreement  in  form  and  substance  satisfactory  to the Committee (an
"Assumption  Agreement"),  and  shall  include  such adjustments, if any, in the
application  of the provisions of the Incentive Agreements and Stock Options and
such  additional provisions, if any, as the Committee shall require and approve,
in  order  to  preserve  such  benefits  to the

                                        8
<PAGE>
Employees.  Without  limiting the generality of the foregoing, the Committee may
require  an  Assumption  Agreement  to  include  satisfactory  undertakings by a
successor:

               (a)     To  provide  liquidity to the Employees at the end of the
Restriction  Period  applicable  to  the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;

               (b)     If  the  succession  occurs  before the expiration of any
period  specified  in  the  Incentive Agreements for satisfaction of performance
criteria  applicable  to  the  Common  Stock awarded thereunder, to refrain from
interfering  with  the Company's ability to satisfy such performance criteria or
to  agree  to  modify  such  performance criteria and/or waive any criteria that
cannot be satisfied as a result of the succession;

               (c)     To  require  any  future  successor  to  enter  into  an
Assumption  Agreement;  and

               (d)     To  take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.

     4.14     Compliance  with  Rule  16b-3.  Transactions  under  this Plan are
              -----------------------------
intended  to  comply  with  all  applicable conditions of Rule 16b-3 promulgated
under the Exchange Act.  To the extent that any provision of this Plan or action
by  the  Committee  fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

     4.15     Information to Shareholders.  The Company shall furnish to each of
              ---------------------------
its stockholders financial statements of the Company at least annually.

     IN  WITNESS  WHEREOF, this Plan has been executed effective as of April 16,
2004.

                                            GLOBAL  LINKS  CORP.

                                            By  /s/  Frank Dobrucki
                                              ---------------------------------
                                              Frank Dobrucki, President

                                        9
<PAGE>

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